Tag Archives: useia

Business/Economics, Idaho, U.S.

What Economic Recovery? I warned you! U.S. gas & Diesel prices about to launch, weekly stockpile report shows supply shortage! Blame PADD 1 & 3! Western U.S. being made to pay for shortages in Eastern U.S.?

“‘This is ridiculous,’ said Criley, 55, who pulled into a Valero station off Hamilton Avenue in San Jose where gas was selling for $4.61 a gallon. A station attendant told him that he had just raised the price 20 cents five minutes earlier. ‘It had been holding at $3.99 for a couple of weeks. Now this. You betcha this hurts.'”-The Oakland Tribune, 04 October 2012

“Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. are beginning to shut pumps because of supply shortages that have driven wholesale fuel prices to record highs.”-Bloomberg, 04 October 2012

“The U.S. average retail price of regular gasoline decreased five cents last week…Prices decreased in all regions of the Nation except the Rocky Mountains….The national average diesel fuel price decreased a nickel…”-U.S. Energy Information Agency, 26 September 2012

So, in September average retail fuel prices slightly decreased.  In some places, like Idaho, per gallon Diesel (distillate fuel oil, DSO) prices held almost steady while gasoline went down a piddly few cents.  Now prices are already going back up.

Do not blame the gas station operators!!!  I managed a gas station in Santa Maria, California, decades ago, and I can tell you the profit margin is just too small at the retail level.  In fact, the current situation in California is shutting down family owned gas stations: “Gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it.”-Sam Krikorian, owner Quality Auto Repair in North Hollywood

A Montana based petroleum industry analysts agrees: “The mom and pop gas stations are having to close down from either not being able to obtain gasoline from their regular distributor or cannot afford the break-even price of almost $5 per gallon!”-Bob van der Valk

Back at the beginning of September I warned of higher fuel prices for October.  This was based on the futures (commodity) prices of fuel, which are usually four weeks out. I basically warned that on 12 October 2012, DSO fuel prices could hit around $5.15 per gallon!

I also explained that fuel prices in the Petroleum Administration for Defense Districts (PADD) 5 area (Alaska, Arizona, California, Hawaii, Nevada, Oregon, Washington) was being hit by fuel refinery shut downs, for reasons known and unknown (and so is the rest of the country).  It looks like that situation has not changed, and might actually be worse on the east coast and along the Gulf of Mexico!

Several media sources are reporting that California fuel refiners are actually rationing out fuel!   The result is that gasoline is reported to have jumped by a full dollar in one week in some parts of the Los Angeles area!

Phillips 66 is shutting down two California refineries for maintenance.  A Chevron pipeline was shut down because of contamination.  On 01 October, a ExxonMobil refinery was shut down because of a power outage. And according to a Bloomberg report, the narcissistic environmental policies created by California politicians/environmentalists have made it impossible to import fuels from outside California!

So don’t blame Obama!  Obama has allowed the opening of more oil fields than any other U.S. President (a true oil man)!!! It’s the fault of the oil companies and fuel refiners, and stupid laws in California!  And that’s the real crux for the drivers in California, the stupid laws!

Even though California is part of PADD 5, their fuel refining laws are so strict that fuel made outside California, yet still within PADD 5, can not be sold inside California!!!

Oh, and the prices Californians are seeing now don’t even reflect what the gas station owners are paying: “Really, since the Chevron Richmond fire, inventories have been tight. As other refinery problems occur, there isn’t much or any available inventory. Retailers are not yet reflecting the wholesale price increases they have experienced...”-Tom Robinson, Robinson Oil

How about PADD 4 (Colorado, Idaho, Montana, Utah, Wyoming)?

Phillips 66, Pocatello, Idaho, 04 October 2012.

According to the U.S. Energy Information Agency, the current average retail price for PADD 4 area DSO is $4.20 per gallon.  If you notice in the pics I posted, here in Bannock County, Idaho, diesel prices range from $4.30 to $4.40 per gallon, at the cheap fuel stations.

CommonCents, Chubbuck, Idaho, 04 October 2012.

For regular octane gasoline, USEIA says the average PADD 4 area retail price is $3.76 per gallon.  My pics show that where I live it’s at least $3.82-$3.84 per gallon.

Padd 4 fuel stockpiles have been stable for all types of gasoline, around 6 million barrels, that’s according to 28 September 2012 data.  All types of DSO, in PADD 4 area, has a stockpile of about 3 million barrels, steady for the past four weeks.  So stockpile issues do not explain why prices in Idaho are higher than the PADD 4 average.

It’s not production issues either.  PADD 4 production has gone up.  DSO production at the end of September was averaged at 0.174 millions of barrels per day (mbpd).  Last year it was 0.156 mbpd.

PADD 4 gasoline production ended September with an average of 0.296 mbpd. At the same time last year it was 0.254 mbpd.

In fact, even in the troubled PADD 5 area, USEIA data shows stockpiles and production hasn’t changed that much in the past four weeks.  (stockpiles of DSO in PADD 5 have actually gone up in the past two months!)

Is it demand?  Nope.  According to USEIA, overall demand for fuel in the United States has gone down slightly since last year!

Average demand for gasoline was at 8.6 mbpd at the end of September, last year it was 8.9 mbpd.  For DSO the average demand was at 3.6 mbpd, compared to last year’s 3.8 mbpd.

The USEIA reported that at the end of September, for the country as a whole, raw oil stockpiles were down by 500,000 barrels.  The ‘expert’ media analysts had expected an increase of 1.5 million barrels!  Overall stockpiles of gasoline went up by 100,000 barrels.  The big loser is DSO, with stockpiles falling by 3.7 million barrels!!!  The net result being an overall reduction in petroleum supplies!

Well, if stockpiles and production are steady or actually up in PADD 4 & 5 areas, and demand is slightly down for the country, then why would overall supplies be low?

Blame PADD 1 and 3!  Stockpiles and production are crashing on the east coast and in the Gulf states!

At the end of September PADD 1 had 41.1 million barrels of DSO, a 20 million barrel drop from last year’s 61.5 million!  Gasoline is at 46.1 million barrels, compared to last year’s 55.3 million barrels!

PADD 3 ended September with 67.4 million barrels of gasoline, last year they had 74.9 million!  DSO saw a huge drop, from 50.8 million barrels last year to 37.4 million barrels at the end of September this year!

For such a big drop in stockpiles, PADD 3 averaged DSO production is unchanged from last year, at 2.4 mbpd.   PADD 1 DSO production average is down slightly from 0.4 mbpd last year to 0.38 this year.

The same can be said of PADD 1 gasoline production; 2.8 mbpd this year versus 2.9 mbpd last year.  Average gasoline production for PADD 3 ended September at 1.8 mbpd, last year it was at 2.1 mbpd, so a big drop there.

This begs the question: Is the western half of the United States being made to pay for shortages that should only be affecting the eastern half of the country?

“I see no reason for this at all. Sounds like a load of rubbish to me!”-Errol Emrich, pissed off California driver

PS: Wholsale/futures/commodity prices for refined fuels ended September 2012 higher.  So expect even higher prices at the pump next month!  Wish the U.S. petroleum industry a Happy Thanksgiving!

Business/Economics, Idaho, U.S.

Occupy America! Diesel disparity in Idaho. Gas prices way down, Diesel way up. Blame increase in U.S. exports! Blame pricing games! Warning for California. Fracking really for fuel production. Grow your own!

In eastern  Idaho, the difference between the price of one gallon of regular gasoline, versus diesel, is now a full one dollar.

Phillips 66, next to the Bannock County court house, Pocatello, Idaho

On November 19, the average price, in the Pocatello/Chubbuck area, hit $3.18 per gallon for regular gasoline, and $4.18 for diesel.

The U.S. Energy Information Administration (USEIA) says gas prices are falling, in general, due to the usual seasonal drop in usage.  I’ve never seen it drop by this much, here in eastern Idaho.  Back in May, the average price was $3.65 per gallon, and it stayed that way through most of the summer.  In the past two or three months the price has dropped almost 60 cents.

The USEIA also says regional fuel refining has a lot to do with prices, but back in September I discovered that PADD 4 gasoline production was being kept below demand. The latest data on PADD 4 gas production shows that, after months of keeping it around 290 thousand barrels per day, regional refineries are now pushing out more than 324 thousand barrels per day.  This is why gas prices, in the Rocky Mountain area (PADD 4) are, or should be, dropping.

In California it’s a different story.  The latest gasoline price survey shows the average price around $3.54 per gallon, with many areas paying $3.79.  California taxes are one reason for the higher prices, but the other reason is that California refines its own fuel, and the refineries are in trouble.

According to the USEIA, despite having the third largest refinery industry in the country California’s refineries are maxed out, there’s just too many people driving too many vehicles.  The USEIA is warning of a fuel price catastrophe in California: “California refineries need to be running near full capacity to meet the State’s gasoline demand. If more than one of its refineries experiences operating problems at the same time, California’s gasoline supply may become very tight and prices can soar. Even when supplies can be obtained from some Gulf Coast and foreign refineries, they can take a relatively long time to arrive due to California’s substantial distance from those sources. The farther away the necessary relief supplies are, the higher and longer the price spike will be.”

Regarding the rising cost of diesel fuel, it looks like some of what I warned about back on November 5 is coming true.  Bottom line; around the world diesel production is down, while international demand is going up and up.

The latest reports on diesel commodity prices show a slight decrease.  The decrease is so small that the global increase in demand for diesel will still cause pump prices to go up.

And how does the global demand affect us here in the U.S.?  According to the American Petroleum Institute (API), most diesel fuel produced in the Untied States is actually being exported to other countries (a 37.6% increase, in both diesel and gasoline exports, in the past year).  That means less diesel for the domestic market.

Diesel fuel is part of the “distillates” family of fuels.  In the U.S. ultra low sulfur diesel is referred to as “Distillate Fuel Oil 15 ppm (parts per million) and under of Sulfur”.  According to USEIA records, ultra low sulfur production, in the United States, varies between 3.2 million and 3.6 million barrels per day.  Now realize that international demand has gone up, and that U.S. refineries are exporting much of their diesel.  Since overall production is remaining in the 3 million to 4 million barrels per day rang, that doesn’t leave much for us.  The result is diesel prices will continue to go up, until U.S. distillate refiners greatly increase production.

For those of us in the Rocky Mountain (PADD 4) area, the USEIA shows an up and down pattern for “Distillate Fuel Oil 15 ppm (parts per million) and under of Sulfur”.  From March through May, diesel production was stuck at about 160 thousand barrels per day.  By the end of July it increased to 195 thousand barrels per day.  Since the end of August it’s dropped, to 185 thousand.  That explains why diesel pump prices in the Rocky Mountain area are going up.

But here’s one more reason, and one that many diesel fuel users have speculated on; the high pump prices of diesel is an attempt by producers to make a bigger profit, since they’ve actually been keeping gasoline pump prices artificially low.  A Reuters article states just that: “This in turn crimps diesel output until the cost of the fuel gets high enough to offset losses from additional gasoline sales.”

The Reuters article explains, not very well, that ultra low sulfur refining requires hydrocracking, a process involving hydrogen.  It’s also used for gasoline.  The problem is that many refineries in the U.S. can not produce both diesel and gasoline.  This might explain the swings in production; one month gasoline production up, and diesel down, the next month it’s reversed.

The push for fracking natural gas, is actually for the fuel refining industry, because it turns out that using the hydrogen in natural gas is a good cheap way to conduct hydrocracking in fuel refining.

Eventually more diesel will be produced, because of the global demand.  Several companies in the Gulf Coast area have invested billions of dollars to build new refineries to extract the hydrogen from natural gas to hydrocrack new diesel fuel.

Diesel fuel users should really look into making their own biodiesel, even though you could get into trouble with the Federal and State tax collectors, as well as the EPA.  Here’s some links:  Backwoods Home Official BioDiesel Home BioDiesel Diesel Master JR Whipple (good for moonshine too, remember diesel is a distillate) There plenty more sites on the internet about making your own diesel, do the research.