SET Energy » diesel

Gas price passing diesel

Dennis M. — Wed, 13 May 2009 18:47:53 +0000

As I wrote two months bac k would happen, the price of gasoline is catching up with diesel after a couple years of separation. A year ago, diesel would cost you 60 cents more than gasoline. But looking at the trends in pump prices over the last few days, parity should be reached by week’s end. In fact, the EIA weekly petroleum report believes gasoline’s price has already overtaken diesel ($2.24 vs. $2.22). AAA says diesel was still a penny and a half pricier this morning. Once higher, gasoline will probably stay more expensive than diesel until winter heating oil demand (a close cousin of diesel) picks up.

Other Developments in the Weekly Oil Report

Crude oil inventories finally moderated this week but remain extremly high, falling more than 1% on lower imports. And gasoline storage fell almost 2% back to average levels for this time of year. Gasoline imports and production were both lower, though gasoline demand more than 4% below year-ago levels moderated the decline. Distillate (diesel) and propane inventories continued to climb way above average for early May as their demand was down 12.1% and 1.3%, respectively. US crude output remained steady ~5.3 Mbd, as new Gulf of Mexico oil made up for other fields’ decline.

Bottom line: Efficient diesel vehicles are competitive again with their gasoline counterparts. And a continued focus on efficiency will allow us to enjoy sub-$3 pump prices for a while with today’s high inventories.

Onwards in the Sustainable Energy Transition-

Gasoline and Diesel Move toward Parity Again

Dennis M. — Wed, 04 Mar 2009 23:46:02 +0000

Remember the old days when gasoline and diesel had roughly the same price? Well, it looks like things are returning toward price parity after last year when diesel often had a premium of ~75 cents. These past few weeks, US diesel production has created ample supply levels and the price has fallen toward the rising price of gasoline.

Gasoline prices have increased from a low just above $1.60 to today’s level of $1.933 per gallon. And with wholesale prices having increased another six cents today to $1.38 per gallon, gasoline appears ready to pass the $2 per gallon mark in coming days. The retail price usually balances out to be ~70-75 cents above wholesale levels.

Meanwhile, high diesel prices – largely due to strong demand from diesel vehicles in Europe and Asia pressuring the global market – sent diesel production above average. This higher production amidst low demand has sent domestic diesel/distillates storage to more than 21% above last year and way above average, as today’s Energy Information Agency Petroleum Report shows. The imminent end to the winter heating season takes some pressure off of distillate heating oil demand, moving prices lower to $2.209 per gallon today. While today’s 27.6 cent difference between diesel and gasoline is significant, it’s less than 40% of the difference last July. And the fact that gasoline demand rose 1.5% last week compared to last year while distillate demand fell 12.9%, means the difference will probably fall further.

I’m not saying parity is guaranteed in the weeks ahead because almost anything can happen in today’s volatile market. But if you are considering a more fuel efficient diesel car, you may not have to worry so much that the price premium will always be as significant as 2008′s 70+ cents per gallon. The next two weeks will be interesting to follow whether diesel and gasoline prices meet again in the $2.00-$2.10 region.

Climate Relevance: Super-efficient diesel models such as the 2009 VW Jetta TDi who beat the Toyota Prius for highway fuel efficiency (while the hybrid Prius is much more efficient in the city) are again becoming a great option for people looking to lower their greenhouse gas emissions.

Onwards in the Sustainable Energy Transition-

Hurricane Ike hits oil & gas with wind and storm surge

Dennis M. — Fri, 12 Sep 2008 19:21:10 +0000

After forecasters predicted a variety of tracks for Ike these past several days, it finally ended up taking one of the worst possible paths in terms of potential damage to oil and gas infrastructure. Not only is it hitting a large swath of offshore oil and gas rigs, but it also threatens to flood and cut off electricity for the refining center of our country. Luckily for everyone, Ike wasn’t organized enough to pull together its Category 4 potential. But the storm surge and the huge swath affected by this enormous storm make it potentially devastating nonetheless. The latest National Hurricane Center track has Ike slamming the Houston row of refineries with the brunt of its wind and flooding.

We could be feeling Ike’s impact for months as these refineries produce more than 20% of the gasoline and diesel that runs our vehicles. Already, crude oil, gasoline, and propane inventories are significantly below post-Katrina-and-Rita levels — so the further decline in most storage levels that will show up in the next two weeks’ reports could seriously affect our fuel markets. The potential mitigating factor is reduced demand now that our country has begun a more fuel-efficient lifestyle this year, especially with summer having passed. But Ike certainly has the potential to stop the bear run of prices in its tracks, even though its winds of 110 miles per hour aren’t the fastest that have hit east Texas.

Hurricane Rita hit north/east of Galveston/Houston, sparing many of its myriad refineries. But if Ike decides to hit this refinery hub with its powerful northeast shoulder, it could take the crucial refineries several weeks to get back online. One of the best sites to monitor oil and gas damages is The Oil Drum, and I will update you daily on what I’ve learned and how it affects our path toward a sustainable energy transition.