Before I get to the main topic, I want to put in a plug for Simplicius’ latest deep dive. In it, he explains a lot of what’s behind the current situation in Ukraine, including why Russia is proceeding at such a deliberate pace: SITREP 8/5/23: Projecting the Intermediate Future
Along with forestry management and range management we've ceased to do anyt5hing positive in the last 50 years, don't nit pick. We've followed the Environmental movement as it infected popular culture and a full generation adopts anything without question, even memorizes the dogma. They profess science yet use little of it and we're Trillions into inefficient energy generation and are destroying about everything they try to adapt it to. I've read of millions of trees cut down to make way for Wind Farms, makes all the sense in the world. We follow a pied piper who dropped out of High School but memorizes dogma at a good rate, like anyone on the Left, can recite and shout down and somehow gets policy enacted, that's the baffling part, grown-up go along with it and now it's a big power grab and race of the stupid to achieve a carbon free planet for carbon based life forms. All of this is about population control, pollution has little to do with it, it may have started with concern but once they felt their power, it's extremely addictive.
Don't put too much faith in Ms. Tverberg's blog post: it has a number of inaccuracies (to put it kindly). Her main thesis is that the world is running short on middle distillates, and that spells disaster for all. However, she doesn't back up her thesis with facts, as far as I can tell.
(Apologies in advance for the length):
To show why her thesis is ill-placed, we can look at the U.S. fuel market. Personal vehicles greatly outnumber industrial vehicles (heavy trucks) in most countries. Personal vehicles in the U.S. have historically been powered by gasoline engines, not diesel engines. This is quite different from other fuel markets (focus on Europe), where personal vehicles have been skewed toward diesel power.
**A quick diversion: industrial trucks use diesel for a number of reasons, but mainly because diesel
fuel is more energy-dense than gasoline--better range for the truck per tank fill.**
Now consider why the refineries in the U.S. are designed/built the way they are (and almost every refinery is unique). A variety of factors dictate the design, from "simple" refineries (generally in the midwest) to quite complex refineries (on the coasts). Like buying a home, location is very important. The U.S. has been reliant on imported crude for many decades due to restrictions on domestic drilling, and a refiner with a complex refinery can buy the cheapest crude imported oil and make good margin. So the coastal refineries were upgraded to handle the cheap, heavy (and sour) crudes, while the inland refineries rely on pipeline deliveries of crude, so they can only use lighter crude grades (heavy crudes need to be diluted before being put in a pipeline--expensive).
**Another diversion: many refer to Russian crude oil as "heavy". But the heaviest Russian crude, Urals blend, has an API of 32, which is really a mid-grade crude. Sakhalin blend has API of 45, and is quite light.**
One other characteristic of crude that affects refining economics is sulfur concentration. This requires a separate step to a greater or lesser degree (dehydrosulfurization) that adds to the cost.
But you can't build a refinery to handle all the different types of crude, because of their property differences. The refiners handle this by making exact blends of different crude grades before they send it to the refinery. There are a number of third-party blending facilities, really storage sites with many tanks, that refiners rent tanks at so they can receive the most cost-effective crudes, and make the blends that their refinery needs to run optimally. Cushing, Oklahoma; St. James, Louisiana; Patoka, Illinois; and Port of Los Angeles are some of the larger terminals in the U.S.
Where am I going with all of this? Every refiner in the U.S. runs their units to optimize overall economics. If you run light, sweet crude through a heavy, sour crude refinery your costs go up dramatically because of the inefficient use of some of the process units in the refinery.
So a lot of the U.S. refineries use heavy crude which produces higher levels of middle distillate (diesel), and the U.S. does not use all of that diesel. Conveniently, Europe consumes more diesel than their refineries make, and the U.S. exports diesel to Europe (and other countries). Conversely, Europe exports gasoline to the U.S.
One way to determine if diesel is in short supply is to look at price, especially compared to gasoline. In the U.S. over the last 30 years, diesel price has been 107% of the price of gasoline, on average. Aside from some excursions in 2014 and 2020, the diesel price premium has been almost constant. As of last month, the premium was 107.9% of gasoline price. If middle distillate was in short supply, the premium would be much higher, and growing. (https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMD_EPD2D_PTE_NUS_DPG&f=M)
Finally, all of this is occuring in a global market where crude suppliers have reduced production intentionally due to lack of demand in the market. Where is the supply shortage?
Postscript: I wasn't going to be overly critical of the original article, but I can't resist:
"Many types of equipment are dependent on Middle Distillates, including semi-trucks, agricultural equipment, ocean-going ships, jet planes, road-making equipment, school buses, and trains operating in areas with steep inclines."
1. Ocean-going vessels use bunkers comprised primarily of #6 fuel oil, a very cheap residual oil from refineries.
2. "Trains operating...steep inclines", implies that the energy density of diesel is required to climb a steep slope (high torque). However, "Diesel" locomotives use diesel-fueled generators to power electric motors that actually drive the wheels. Electric motors achieve very high torque, even more than diesel engines.
One other important bit of info to round out Piquet's nice summary of refinery facts: in the US, no new refineries have been commissioned for decades due to regulatory concerns. The capacity in the US is not 'elastic'
Thanks for your time and effort. Re Tverberg's "main thesis," that's exactly why I placed my caveat right up front re her estimates of available oil. Her views on that have nothing at all to do with my uses of her article. That's also why I reference government policy for high prices at the end. But I appreciate your additions, since I'm not an expert in this by any means.
"New automotive industry regulations are expected to come from the US Environmental Protection Agency on Wednesday, which will result in 67% of car sales being electric by 2032."
"A source told the New York Times that the requirements will ensure that between 54% and 60% of all vehicles sold in the US will be electric vehicles (EV) by 2030 and between 64% and 67% by 2032. Only 5.8% of the vehicles sold in the US in 2021 were fully electric."
Thank you for this highly informative post, which has taught me a lot. The consequences to our fragile and highly indebted economy are enormous. However, as D F Barr has pointed out in his comment, the problem is that "The properly credentialed “experts” ruling over us sure are incompetent, greedy, lazy and evil."
I don't see Canada, Red China, or Brazil listed on the chart, the #4, #6, and #9 oil producers respectively in 2022. All non-OPEC countries. Seems like their oil production capacity would at least be mentioned along with oil type(s) they produce. Did I miss something? Or did someone else miss something?
It is becoming increasingly more difficult for us mere mortals to have to live in the world of make believe being imposed upon us. The properly credentialed “experts” ruling over us sure are incompetent, greedy, lazy and evil.
Anyone reading this is part of the tiny percent of the population that has interest in our knowledge of any of the subjects discussed here. That’s the real problem.
In any normal situation we are not required to know all the details of our energy sources. As D F Barr has pointed out, the problem is that "The properly credentialed “experts” ruling over us sure are incompetent, greedy, lazy and evil."
MS. Granxyz knows to be a good little trooper, do what she's told and play dumb-blonde when common-sense contradictions to 'her policies' arise.
What does trouble me, really amongst most progressive/liberal/Marxist is the lack of caring. Most significantly - and telling - not giving a hoot about life. From babies to the 6 billion or so they'd prefer weren't around to block their utopian plans, only their own is of any matter to that cabal.
Hoping your segment of the world is treating you well good sir! (WrH)
Absolutely, Wayne. She'll do as she's told just to keep her job and accrue more power. And you're spot on about the Lefties. They love "The People", but seem to hate ordinary individuals. I never got this abortion thing. It's almost like it's a thing they have to go through to join the club. I live in one of the saner parts of Europe, so things aren't too bad. I hope your part of the US is still sane too!
KLG, you pounded that nail dead center on it's head! Marxism, or at the 21st century version that is based on it, requires elimination of an upwardly mobile Middle Class. Education was an early, important pillar of Liberty that has been significantly demolished - as in critical thinking isn't widespread and indoctrination is center stage. *The PROPER indoctrination, of course... none of the Judea-Christian messy stuff in 'Public Schools'... Sorry to intrude with my Rant just now, I always appreciate your input and I guess your comment lit a fuse somehow... Best to you always! (WrH)
Along with forestry management and range management we've ceased to do anyt5hing positive in the last 50 years, don't nit pick. We've followed the Environmental movement as it infected popular culture and a full generation adopts anything without question, even memorizes the dogma. They profess science yet use little of it and we're Trillions into inefficient energy generation and are destroying about everything they try to adapt it to. I've read of millions of trees cut down to make way for Wind Farms, makes all the sense in the world. We follow a pied piper who dropped out of High School but memorizes dogma at a good rate, like anyone on the Left, can recite and shout down and somehow gets policy enacted, that's the baffling part, grown-up go along with it and now it's a big power grab and race of the stupid to achieve a carbon free planet for carbon based life forms. All of this is about population control, pollution has little to do with it, it may have started with concern but once they felt their power, it's extremely addictive.
Don't put too much faith in Ms. Tverberg's blog post: it has a number of inaccuracies (to put it kindly). Her main thesis is that the world is running short on middle distillates, and that spells disaster for all. However, she doesn't back up her thesis with facts, as far as I can tell.
(Apologies in advance for the length):
To show why her thesis is ill-placed, we can look at the U.S. fuel market. Personal vehicles greatly outnumber industrial vehicles (heavy trucks) in most countries. Personal vehicles in the U.S. have historically been powered by gasoline engines, not diesel engines. This is quite different from other fuel markets (focus on Europe), where personal vehicles have been skewed toward diesel power.
**A quick diversion: industrial trucks use diesel for a number of reasons, but mainly because diesel
fuel is more energy-dense than gasoline--better range for the truck per tank fill.**
Now consider why the refineries in the U.S. are designed/built the way they are (and almost every refinery is unique). A variety of factors dictate the design, from "simple" refineries (generally in the midwest) to quite complex refineries (on the coasts). Like buying a home, location is very important. The U.S. has been reliant on imported crude for many decades due to restrictions on domestic drilling, and a refiner with a complex refinery can buy the cheapest crude imported oil and make good margin. So the coastal refineries were upgraded to handle the cheap, heavy (and sour) crudes, while the inland refineries rely on pipeline deliveries of crude, so they can only use lighter crude grades (heavy crudes need to be diluted before being put in a pipeline--expensive).
**Another diversion: many refer to Russian crude oil as "heavy". But the heaviest Russian crude, Urals blend, has an API of 32, which is really a mid-grade crude. Sakhalin blend has API of 45, and is quite light.**
One other characteristic of crude that affects refining economics is sulfur concentration. This requires a separate step to a greater or lesser degree (dehydrosulfurization) that adds to the cost.
But you can't build a refinery to handle all the different types of crude, because of their property differences. The refiners handle this by making exact blends of different crude grades before they send it to the refinery. There are a number of third-party blending facilities, really storage sites with many tanks, that refiners rent tanks at so they can receive the most cost-effective crudes, and make the blends that their refinery needs to run optimally. Cushing, Oklahoma; St. James, Louisiana; Patoka, Illinois; and Port of Los Angeles are some of the larger terminals in the U.S.
Where am I going with all of this? Every refiner in the U.S. runs their units to optimize overall economics. If you run light, sweet crude through a heavy, sour crude refinery your costs go up dramatically because of the inefficient use of some of the process units in the refinery.
So a lot of the U.S. refineries use heavy crude which produces higher levels of middle distillate (diesel), and the U.S. does not use all of that diesel. Conveniently, Europe consumes more diesel than their refineries make, and the U.S. exports diesel to Europe (and other countries). Conversely, Europe exports gasoline to the U.S.
One way to determine if diesel is in short supply is to look at price, especially compared to gasoline. In the U.S. over the last 30 years, diesel price has been 107% of the price of gasoline, on average. Aside from some excursions in 2014 and 2020, the diesel price premium has been almost constant. As of last month, the premium was 107.9% of gasoline price. If middle distillate was in short supply, the premium would be much higher, and growing. (https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMD_EPD2D_PTE_NUS_DPG&f=M)
Finally, all of this is occuring in a global market where crude suppliers have reduced production intentionally due to lack of demand in the market. Where is the supply shortage?
Postscript: I wasn't going to be overly critical of the original article, but I can't resist:
"Many types of equipment are dependent on Middle Distillates, including semi-trucks, agricultural equipment, ocean-going ships, jet planes, road-making equipment, school buses, and trains operating in areas with steep inclines."
1. Ocean-going vessels use bunkers comprised primarily of #6 fuel oil, a very cheap residual oil from refineries.
2. "Trains operating...steep inclines", implies that the energy density of diesel is required to climb a steep slope (high torque). However, "Diesel" locomotives use diesel-fueled generators to power electric motors that actually drive the wheels. Electric motors achieve very high torque, even more than diesel engines.
One other important bit of info to round out Piquet's nice summary of refinery facts: in the US, no new refineries have been commissioned for decades due to regulatory concerns. The capacity in the US is not 'elastic'
Thanks for your time and effort. Re Tverberg's "main thesis," that's exactly why I placed my caveat right up front re her estimates of available oil. Her views on that have nothing at all to do with my uses of her article. That's also why I reference government policy for high prices at the end. But I appreciate your additions, since I'm not an expert in this by any means.
https://www.zerohedge.com/political/scottish-govt-axes-16-million-trees-clear-way-greener-solutions
https://www.powerlineblog.com/archives/2023/08/evs-on-a-collision-course-with-reality.php
From April:
"New automotive industry regulations are expected to come from the US Environmental Protection Agency on Wednesday, which will result in 67% of car sales being electric by 2032."
https://www.power-technology.com/news/epa-electric-vehicles-67-us/
More:
"A source told the New York Times that the requirements will ensure that between 54% and 60% of all vehicles sold in the US will be electric vehicles (EV) by 2030 and between 64% and 67% by 2032. Only 5.8% of the vehicles sold in the US in 2021 were fully electric."
Two things.
1. Elections
2. SCOTUS steadily clipping the wings of admin agencies. EPA has already taken some hits and there are more coming.
Great article.
Absolutely agree, great article Mark.
Tx.
I don’t know, but I’m beginning to think that “stupid” would be an upgrade for these people. Un-fricking-believable.
Thank you for this highly informative post, which has taught me a lot. The consequences to our fragile and highly indebted economy are enormous. However, as D F Barr has pointed out in his comment, the problem is that "The properly credentialed “experts” ruling over us sure are incompetent, greedy, lazy and evil."
I don't see Canada, Red China, or Brazil listed on the chart, the #4, #6, and #9 oil producers respectively in 2022. All non-OPEC countries. Seems like their oil production capacity would at least be mentioned along with oil type(s) they produce. Did I miss something? Or did someone else miss something?
Well, oil (I'll) be damned! The Davos/Neocon folks really didn't think this through, did they?
Right. Western Canada is a perfect match for the US in energy terms. Crazy people.
It is becoming increasingly more difficult for us mere mortals to have to live in the world of make believe being imposed upon us. The properly credentialed “experts” ruling over us sure are incompetent, greedy, lazy and evil.
Anyone reading this is part of the tiny percent of the population that has interest in our knowledge of any of the subjects discussed here. That’s the real problem.
In any normal situation we are not required to know all the details of our energy sources. As D F Barr has pointed out, the problem is that "The properly credentialed “experts” ruling over us sure are incompetent, greedy, lazy and evil."
You do make a good point. As they’re increasingly proving, they’ve got power and they don’t care how many people disapprove of what they do.
Great informative post, thanks for this, this type of solid information is what we need.
PS I wonder if Jennifer Granholm knows any of this?
Barbie? Not a chance.
The definition of a rhetorical question.
I doubt she knows much of anything.
G'day S'21!
MS. Granxyz knows to be a good little trooper, do what she's told and play dumb-blonde when common-sense contradictions to 'her policies' arise.
What does trouble me, really amongst most progressive/liberal/Marxist is the lack of caring. Most significantly - and telling - not giving a hoot about life. From babies to the 6 billion or so they'd prefer weren't around to block their utopian plans, only their own is of any matter to that cabal.
Hoping your segment of the world is treating you well good sir! (WrH)
Absolutely, Wayne. She'll do as she's told just to keep her job and accrue more power. And you're spot on about the Lefties. They love "The People", but seem to hate ordinary individuals. I never got this abortion thing. It's almost like it's a thing they have to go through to join the club. I live in one of the saner parts of Europe, so things aren't too bad. I hope your part of the US is still sane too!
Heh. Probably not.
Does she care? Does she know what she doesn’t know?
She is in love with her little electric car she drove to DC.
So the same crew trying to eliminate fossil fuels are same ones profittng off the less production.
KLG, you pounded that nail dead center on it's head! Marxism, or at the 21st century version that is based on it, requires elimination of an upwardly mobile Middle Class. Education was an early, important pillar of Liberty that has been significantly demolished - as in critical thinking isn't widespread and indoctrination is center stage. *The PROPER indoctrination, of course... none of the Judea-Christian messy stuff in 'Public Schools'... Sorry to intrude with my Rant just now, I always appreciate your input and I guess your comment lit a fuse somehow... Best to you always! (WrH)