diesel

Monday, 06/27/2022

Refinery closures. Shifting demand for gasoline, diesel and jet fuel. Yawning price differentials for refined products in neighboring regions. These and other factors have spurred an ongoing reworking of the extensive U.S. products pipeline network, which transports the fuels needed to power cars, SUVs, trucks, trains and airplanes — not to mention pumps in the oil patch, tractors and lawnmowers. New products pipelines are being built and existing pipelines are being repurposed, expanded or made bidirectional, typically to take advantage of opportunities that midstreamers, refiners and marketers see opening up. In today’s RBN blog, we begin a review of major pipelines that batch gasoline, diesel and jet fuel and look at the subtle and not-so-subtle changes being made to the U.S. refined products distribution network.

Wednesday, 06/22/2022

In film and television, the “boxed crook” trope is where a condemned person is sought as a last-ditch effort to pull off some impossible mission or overcome a formidable opponent. In return, the convict is typically offered amnesty or other consideration by the operatives in charge. Millennials will probably think of the recent Suicide Squad movies. For Generation X, The Rock starring Sean Connery was a great example. And for the boomers, it was The Dirty Dozen. Our current situation in the U.S. energy sector may not be quite as thrilling as those movies but the same plot elements exist. In today’s RBN blog, we discuss the predicament faced by industry and political leaders and begin to sort out the various proposals to put a lid on prices and restore energy security.

Monday, 06/20/2022

In the next few days, U.S. Energy Secretary Jennifer Granholm will hold an emergency meeting with leading energy executives to discuss steps E&Ps and refiners could take to increase crude oil production, refinery capacity and the production of gasoline, diesel and jet fuel, all with the aim of reducing prices. The prelude to the get-together was less than ideal, though. In a June 14 letter to the top brass of four integrated oil and gas giants and three large refiners, President Biden criticized them for “historically high refinery profit margins” and for shutting down refining capacity before and then during the pandemic. In addition to rejoinders from the companies, the American Petroleum Institute (API) and the American Fuel & Petrochemical Manufacturers (AFPM) defended their actions, discussed the complexity of refined products markets, and asserted that the Biden administration’s statements and policies have actually discouraged investment in refining and oil and gas production. Is there a middle ground here? In today’s RBN blog, we look at the high-level correspondence and discuss how at least some compromises might be possible.

Monday, 05/23/2022

U.S. diesel inventories are at their lowest level for May since 2000 and East Coast stocks recently hit their lowest mark for any week or month since the EIA started tracking them in 1990. Crack spreads for diesel — and, more recently, for gasoline — have gone parabolic, giving refiners the strongest financial signal ever to produce more diesel and gasoline as we enter the summer travel season. More jet fuel too. The problem is, U.S. refineries already are running flat-out. And Europe? It’s facing big cuts in crude oil and refined-products imports from Russia as well as much higher prices for — and possible shortages of — oil and natural gas, the latter being the primary fuel for operating refinery hydrocrackers, which upgrade low-quality heavy gas-oils into high-quality diesel, gasoline and jet. It’s a mess, and not easily fixable, as we discuss in today’s RBN blog.

Friday, 05/06/2022

Over the past few weeks, many U.S. refiners reported even-stronger-than-expected first-quarter results, and it’s likely their good fortune will continue. Why? Despite the skyrocketing price of crude oil — refiners’ primary feedstock — the prices of the gasoline and diesel they produce have risen even more. And it’s that now-yawning gap between crude oil and refined-products prices that’s been driving refining margins — and refiners’ profits — to near-historic levels. Refining margins, like the character and capabilities of thoroughbreds like “Rich Strike” in Saturday’s amazing Kentucky Derby, are unique to each refinery because of their different sizes, equipment and crude slates (among other things), but there’s a tried-and-true way to estimate the refining sector’s general profitability, as we discuss in today’s blog on U.S. refiners’ sky-high crack spreads.

Tuesday, 03/08/2022

WTI is selling for north of $120 a barrel, gasoline and diesel are retailing for more than $4.10 and $4.80 a gallon, respectively, and, with Russia continuing its unprovoked war against Ukraine, it’s hard to imagine prices for hydrocarbons easing by much anytime soon. As startling as the recent spikes in crude oil and refined products prices may be, however, it’s worth keeping in mind that, in real-dollar terms, prices for these commodities have been considerably higher in the past, including through much of the 2006-14 period and back in 1979-81. And don’t forget, the car, SUV, or pickup you’re driving today consumes about two-thirds as much fuel per mile, on average, as the vehicle you (or your parents) drove back when Ronald Reagan was running for president and Pink Floyd’s The Wall was the best-selling album. In today’s RBN blog, we put today’s “record-breaking” prices for crude oil and motor fuels in perspective.

Tuesday, 08/10/2021

Traveled by air in the U.S. lately? Airports and airplanes are packed to the gills. Unruly passengers are making the nightly news and becoming YouTube sensations. Jet fuel shortages are popping up. But there are other developments in air travel too, including a push by the global airline industry to rein in its greenhouse gas emissions. And the heart of that movement is sustainable aviation fuel, or SAF. While the blending of SAF with conventional jet fuel is not mandated in the U.S., the alternative fuel is gaining altitude, in part because it can generate layers of credits that can be utilized in various renewable fuel trading programs. In today’s blog, we look at the current status of renewable fuel in the U.S. aviation sector.

Sunday, 06/27/2021

Renewable diesel is a popular topic in the transportation fuel space, and for good reason. For one, RD provides a lower-carbon, renewable-based alternative to petroleum-based diesel; for another, it’s a chemical twin of and therefore a “drop-in” replacement for ultra-low sulfur diesel. But, most of all, there are the large financial incentives provided by California’s Low Carbon Fuel Standard, the U.S. Renewable Fuel Standard, the U.S. Biodiesel Tax Credit, and other programs, which can make RD production highly profitable. Driven by these factors, there’s a lot of renewable diesel production capacity under construction or on the drawing board: everything from greenfield projects to expansions of existing RD refineries to conversions of old-school refineries so they can make RD. Today, we put the spotlight on RD and discuss how it differs from biodiesel, how it’s produced, and the new RD capacity coming online in North America.

Thursday, 06/17/2021

With Environmental, Safety, and Governance (ESG) conscientiousness on the rise and the push to rein in greenhouse gas emissions gaining momentum by the day, many traditional players in the hydrocarbon sector are considering alternative energy sources to invest in. Two key questions they ask themselves when evaluating these options are: Does it make economic sense once you’ve factored in tax credits and other incentives, and can it be incorporated into North America’s existing energy infrastructure. Wind and solar power clearly fit the bill. So does renewable diesel, which also benefits from governmental programs and that it can be blended into petroleum-based diesel. Another alternative gaining traction is renewable natural gas, which is “produced” by capturing methane from landfills and wastewater treatment plants. Today, we discuss the potential and pitfalls of “the notorious RNG.”

Sunday, 06/06/2021

Biodiesel has long constituted a small but stable portion of the diesel fuel diet in North America, its production being driven primarily by the U.S. Renewable Fuel Standard and Biodiesel Income Tax Credit (BTC). Produced from a variety of feedstocks, including soybean oil, corn oil, animal fats, and used cooking oils, biodiesel offers a low “carbon intensity,” or CI — a big plus in California and other jurisdictions with low carbon fuel regulations. The incentives for producing biodiesel are substantial, but there are two big catches with the fuel: a limited supply of feedstocks and properties limiting how much can be blended with petroleum-based diesel. Today, we continue our series on low carbon fuel standards with a look at biodiesel’s pros, cons, history, and prospects.

Monday, 05/10/2021

We all hope that by the time you read this the operators of the ransomware-impacted Colonial Pipeline will have been able to restore service to more of the 5,500-mile refined products delivery system — maybe even to all of it. In any case, the shutdown of the Houston-to-New-Jersey pipeline system on Friday both exposes the vulnerability of the North American pipeline grid to malevolent hackers and reveals how, by its very nature, that same grid offers at least some degree of redundancy and resiliency built into it. A lot of that ability to respond to a crisis, whether it be a pipeline leak or a hack by an Eastern European criminal group called DarkSide, involves what you might call “market-inspired workarounds” — alternative suppliers reacting to an anticipated supply void and potentially higher prices by jumping into action. Today, we look at what the ransomware attack on the U.S.’s largest gasoline, diesel, and jet fuel transportation system can teach us.

Thursday, 03/11/2021

ESG is quickly becoming one of the most frequently used acronyms in energy-company Zoom calls and quarterly earnings calls, joining the ranks of oldies-but-goodies like WTI, Bcf, and NGLs. Everyone — including investors — is pushing hydrocarbon producers, midstreamers, and end-users to improve their “environmental, social, and governance” performance nowadays. It’s not always easy, though, especially when the greener, pro-planet thing to do is a lot more expensive. The good news is that there are at least a few potential win-win opportunities out there where companies can both reduce their carbon footprint and save money. In today’s blog we’ll discuss why, in some situations, CNG makes sense as a clean fuel for use as a potential replacement for diesel, propane, and fuel oil in a wide range of energy, mining, forestry, and utility settings.

Thursday, 02/25/2021

Canada, like the U.S., is in the enviable position of having vast crude oil reserves as well as a robust domestic refining sector capable of satisfying national needs for gasoline, diesel, and other petroleum products. Refiners in both countries have also benefited in recent years from increasing oil production within their borders. Growth in the Alberta oil sands in particular has given refineries in both Western and Eastern Canada increased access to domestically sourced bitumen and upgraded synthetic crude oil. Today, we continue our series on Canada’s refining sector with a look at the refineries in the eastern half of the nation, and their increasing use of Canadian oil.

Monday, 02/15/2021

Long established as an oil-producing region, Western Canada has also become a major producer of refined products. With enough oil available to serve the nine refineries in the region, there is no need to import crude oil, making Western Canada one of the few parts of the world where the refineries are completely self-sufficient regarding oil supply. The region is also noteworthy in that, like the U.S. Gulf Coast, its refining capacity and gasoline, diesel, and jet fuel output is vastly greater than its own demand, resulting in a large surplus of refined fuels that can be sent across Canada and exported to the U.S. Today, we look westward, focusing on the nine refineries located in the Canadian West.

Tuesday, 02/02/2021

Canada may be the land of backyard hockey, lacrosse, and loonies, but Canadians have many similarities to folks in the U.S. The same holds true for Canada’s refining sector, which like its American counterpart has been adjusting to big changes in domestic crude oil production, a declining need for imported oil, and, most recently, a period of severe refined-product demand destruction caused by the pandemic. What Canadian refiners lack, though, is the attention they deserve. After all, nearly 2 MMb/d of crude oil flows through their 17 refineries. And, by the way, they now turn to U.S. producers for virtually all their oil imports — a far cry from where things stood before the Shale Era. Today, we kick off a three-part series that examines Canada’s refining sector in greater detail.