Diesel prices following gold soon

[Boonbltz]

Stopped at the pump today East Bay California almost choked on my spit $2.59 a gallon, Premium unleaded at $2.39 what is going on here. Every 18 miles I have to pay the "man" $2.59 now thats a toll. You have to pay to play here on the west coast, you would think beings I have a couple refineries (don't mind my spelling) withen eyesight fuel would be cheaper, I really feel sorry for the independent truckers in this area. :eek:

[OC_DMAX]

It is obvious in the California market there is no longer competition. The oil companies need to expand their refinery capacity. What are the chances of that capital investment happenning when profits are up 30% as a result of the "shortage" of refinery capacity? Just like the supposed electrical crisis we had several years ago, just another excuse to raise prices.

Not sure where Pittsburgh is, but the prices in SoCal are about the same.

[HD-Nate]

Reg $1.88
Prem $2.08

Diesel $$1.54 this morning :D

[OC_DMAX]

87 octane gas - $2.35
89 octane gas - $2.45
91 octane gas - $2.55
#2 Diesel------ $2.45

Seems like the prices have started to rise again over the last several days.

Everyone had better hope this virus does not head eastward!!

[Lt .59]

We're all being de-sensitized! Each year fuel goes up, then drops down, but never to where it was the year before. Within a couple of years, we're going to be satisfied with paying $2.50 per gallon.
Taking advantage of thy fellow man. All for the sake of a buck. Absolutely disgusting !!!!!

[Texasoilman44]

Prices in Texas up a bit also, $1.54. West coast, and some midwest states are higher due to lower sulfur regulations. The rest of the country will also be required to follow the lower specs on sulfur in the next couple of years.

Believe it or not, capacity at refineries is not really the big key in the higher prices (even on the west coast, I know this because we have a couple of refineries there). Distallate hydrotreating, the type of process that removes sulfur from diesel has to be run at higher severity rates to remove more sulfur out of the fuel. We do not cut the amount of barrels that we run through our hydrotreaters to meet the spec, we just increase the temperature at which the reactors run. It cost more to run the temperatures higher, both in fuel costs and also catalyst costs. The hotter the reactors run, the shorter the life of the catalyst.

There are some newer technologies out there for sulfur removal in distallate products, however they are not really more efficient than the existing technologies. Meaning, if we build the units they still will cost about the same to run the way we do with existing technologies, plus we had to spend the $$$'s to build them.

Unfortunately for us diesel truck owners, most of the R&D in refining the last couple of years has been geared toward lowering the sulfur in gasoline. The spec on sulfur in gasoline in 2006 will be 30ppm. All refiners are scrambling to revamp existing units and build new ones to be able to meet the spec. Once 2006 rolls around, gasoline cannot be sold anywhere in the US above 30ppm sulfur levels.

Not sure if the sheds any light on the issue, hope that it does. I guess I just want you all to know that us "greedy refiners" are struggling to make money. We are not rolling in it.

Regards,

Kevin

[OC_DMAX]

Texasoilman44,

Interesting insight, but I have a couple of comments. First, I remember reading a document from either the EPA or CARB (cannot remember which one, I have read many on this topic) that discussed the upcoming low sulfur requirements for diesel fuel. There was a lot of discussion about loss of lubricity (and how to remedy this) plus there was a portion of the document dedicated to cost. If I remember correctly, the anticipated cost for going to low sulfur diesel at the pump was being projected at 5 cents per gallon. A jump from $1.65 per gallon to $2.45 per gallon over a three month interval seems to be substantially more than 5 cents. This seems to have occured in California every spring/summer time for the last three years. Then in the fall/winter months, prices subside. So something else is going on here besides upgrades to refineries. The price spikes are just too large.

The second comment is that most Californians remember our "electricity shortage" of a few years ago. It turned out that "supposed" shortage was contrived by a half dozen energy traders/companies. Some of the largest frauds were conducted by Enron and we all know what was going on there. Huge fines have been paid and people are going to jail. Electricity generation was being held back during key times of the day to drive spot electricity prices to over $1000 per MegaWattHour. The average cost for generation was around $30 per MegaWattHour. Huge profits were artificially generated.

There are many parallels between what happened a few years ago in electricity and today with gasoline prices. When profits are directly tied to shortages that appear in free markets, then the tempatation for corporations to exploit these situations is just too great. I hope you can understand why Californians feel the way we do. We do not trust these large energy corporations nor of the federal government to effective control them (at least not the current administration).

Regards,
Alan

[Texasoilman44]

Alan,

Concerning documents that the EPA has put out on what it would cost at the pump to produce lower sulfur fuels, they are probably fairly close. The one thing we need to keep in mind, is the price of oil. West Texas closed Friday at $39.93 per barrel. For those of you that do not know, a barrel equals 42 gallons. If we could convert all of that 42 gallons to diesel, that would roughly calculate out to $0.95 per gallon cost. We cannot convert all of it, there are some lower value products generated, so keep that in mind. Also, remeber that oil prices are at an all time high which has a great impact on prices at the pump. If oil prices had not changed in the last 10 years, I would say that $0.05 per gallon increase to produce lower sulfur fuel would be close.

I am not by any mean trying to make anyone swallow the prices any easier, just trying to add my 2 cents worth. I can attest to the fact though that it does cost more to make lower sulfur fuels. I am a process supervisor on a reforming unit and a distillate desulfurization unit in an oil refinery. The reformer upgrades low octane gasoline the distillate desulfurizer extracts sulfur out of distillate (diesel, kero, jet etc.)

Kind regards,

Kevin

[mdadgar]

Kevin,

Thanks for weighing in on this thread. It's good to see info from the supply side of the equation.

However, as a California resident, I gotta call bullsh*t on this one. The oil companies are claiming higher production prices yet are posting record earnings.

Just one example:

ChevronTexaco Earnings Report (http://www.chevrontexaco.com/news/press/2004/2004-04-30.asp)

YOUR company may be struggling a bit, but the Big Oil is gouging the crap out of us. Whether or not you think that's a problem depends on your perspective on laisse faire economics, of course.

But either way let's tell it like it is, shall we?

- Mark, paid $2.35/gallon yesterday

[VtwinMax]

diesel here locally is $1.50

Here is where I go to check gas prices and it's great to check the trends with graphs. I think diesel is following the gas trend. (local)

http://www.atlantagasprices.com/index.asp

this site should also get you started
if you want to see trends (nationwide)

http://www.gasbuddy.com/

this might also be helpful, although I thought the updates were out of date. (do a sort on diesel after you pick your state)

http://www.gaswars.com/data/USA/index.html

[Inspector]

I wish someone would clarify just how the cracking proscess works and where on the tower the distalates are tapped out. I was under the impression that the higher distalates such as the unleadeds came out high and the lower ones came out near the bottom of the proscess of a given amount of crude. To my way of thinkin, which may be all wet, to produce the huge amounts of unleaded that are required there has to be an over amount of the diesels and keros. Wouldn't the refiners have to poor it on the ground if there wasn't a market for them to continue to produce gasolines? I for the life of me can't understand why diesel is selling for the same price as plus unleaded around here. Also here in Utah in the Bountiful refining area which includes Chevron, Flying J, Phillips, and one other I can't think of get all there crude from the same pipe out of the overthrust in the eastern Ut area yet we are paying some of the highest prices for fuel. Go figure. I feel that we are being screwed without protection. My two cents for what its worth.
Denny

[Bobcat698]

Still paying $1.76/gallon here..

[Texasoilman44]

Denny,

I will try and give a short "Refining 101" overview.

The refinery that I work in charges roughly 450,000 barrels per day of crude oil. The crude oil comes in to a crude unit, we call ours a "Pipestill". The pipestill's purpose in life is to heat up and start a rough fractionation cut on the crude oil. The products it makes are mostly heavy oils which we will call "gas oil", distillates such as diesel/kero, naphtha (gasoline), butane, propane and off-gas.

The distallate they make, is what ends up as diesel at the pumps. Out of the 450,000 barrels the pipestill charges, about 120,000 barrels of it ends up as diesel that is then sent to a desulfurizer unit (hydrotreater). At the distillate hydrotreater, the diesel is heated, mixed with hydrogen and run across catalyst beds that break off the sulfur from each molecule. The sulfur combines with the hydrogen to form H2S or hydrogen sulfide gas. The diesel that now does not have the sulfur on it's molecule is cooled and seperated from the hydrogen sulfide gas, and then sent to blending tanks where the blenders add the appropriate additives and ship it up the pipes to our marketing area.

During winter months, a good amount of the diesel that comes off the pipestills is blended into heating oil because it is worth more during that time of year. During summer months, material that would normally be blended into heating oil components is blended into LSFO2 (low sulfur fuel oil #2 or diesel).

That is a quick summary of how diesel comes out of crude, now for those interested I will give a quick overiew on gasoline.

Remember from above, the pipestill produces what I called "gas oil". That is then sent to cracking units (fluid catalytic cracking units or FCCU's). There it is heated, and injected into alumina silca catalyst (basically dirt) at about 1000 degress F. The molecules are then broken or "cracked" into smaller molecules and some are even changed from straight chains (parafins) to rings (olefins) which are wonderful high octane blend stock. From there it is sent to blending tanks and mixed with other stocks such as alkylate and reformate which are even higher octane and now you have gasoline.

The one thing to keep in mind through all of this, is the goal of every refiner is to make gasoline. It has the highest demand, so it brings the best price. Diesel is a byproduct, however the market is growing more and more each day.

When I was in Europe a couple of years ago (not to give away which company I work for), diesel was cost roughly the same at the pump as gasoline. The demand for diesel in europe is high because they get much better mileage than gasoline engines and both were around $1.20 per litre. If you do the math (3.8 litres/gal X $1.20) you will come up with $4.56 per gallon. I am not trying to make anyone swallow what WE are paying any easier, however we still have it better than everyone else.

Any more questions on refining, let me know and I will answer if I can. Hopefully this helped you out Denny.

Kind regards,

Kevin

[Inspector]

Thanks Kev.
I know that the market is growing in the diesel eng area but as you said diesel is a byproduct. Isn't it true that out of a 42gal barrel no mater what you do you will have a certain amount of the "gas-oils" (diesels)that have to be dealt with as the process goes on up the tower? It seems to me that most of that 42 gal barrel goes to the gasoline production. I know that other chemicals are produced but diesel is the junk that is left over. I guess I have a hard time with paying the same price for the junk as for plus gasoline. The over the road independent trucker is going out of business with these prices. I hate to have government into anything anymore but this whole issue needs to be looked into IMHO.
Denny

[TDiesel]

Support out local farmers Bio Diesel. In Europe they dont have to drive as far either so paying more at the pump wont hurt them as much. It wont take long before you will see the impact of fuel prices in the store. This country runs on Diesel, I was reading on msnbc that this country uses 546 million gallons of diesel a WEEK! All the trucks,trains,plans in this contry run on it. It is the blood of this country with out it you wouldnt get your morning coffe

[Texasoilman44]

Denny,

As I was trying to relay in last post, the whole goal of basically every refinery in the world is to make GASOLINE. I do sympathize with you on having to pay premium prices for what seems a "byproduct". If you just did the simple math from my earlier post, we run roughly 450,000 barrels of day into the refinery and send out about 120,000 barrels of diesel, that equats to about 27% of the crude is diesel. With the exception of the small amounts of chemical feed stocks that we get out of the crude (propane, butane, benzene, toluene, xylene), the remainder is shipped out as gasoline. So your observation that we are paying premium prices for "byproduct" looks to be true at face value. Also, remember that like most everything else, the price is dictated by supply and demand.

Kind regards,

Kevin

[DMAX LEGEND]

Local station was $2.13 friday night, then $2.36 saturaday. Wow, that was 23 cents increase in one whack! I hate to admit it, but I can remember when that 23 cents would buy 2 gallons of diesel.

[mdadgar]

Kevin,

You hit the nail on the head. It's ALL about supply & demand.

Funny how much we love capitalism when it benefits us but whine about it when it doesn't. smile.gif

- Mark

[Inspector]

Kev:
Are you saying that for every 450,000 brls of crude 150,000 brls of diesel are produced in the process? Or 150,000 brls of that 450,000 are dedicated to produceing diesel?
Denny
:rolleyes:

[Texasoilman44]

Denny,

Of the 450 mbls, roughly 120 mbls of it fractionates out as diesel. So.........we are pumping 120 mbls of diesel fuel per day out of our refinery. Roughly 27% of the crude readily fractionates out as diesel. We can "crack" crude and other gas oils into diesel, however it is not economical to due that and produce less gasoline. Like I said, gasoline is where the $'s are at.

Kevin

[HDMXDiesel0817]

Ya'll think that we pay too much, my dad just got back from his vacation in Iceland and said it was about 1.50 per LITER, which would be roughly $6.00 a GALLON NOW that sucks. Last I filled up here it was around a 1.70 something for diesel. Plus I travel to Virginia twice a week and love watching the prices down there, it was still in the 1.50s for diesel, but gas was rocketing up to the 2.00 mark. "sigh" it's good to have a diesel :cool:

87 2.05
89 2.15
91 2.25

Istill LOVE my DIESEL and don't mind paying it really, but if I feel the crunch I may put the stock tires back on and get my 25+mpg. That'll most likely be after I wear out my 285s.

Here's a thought though if they would like us to buy a hybrid don't make them look like crap, put a hybrid into a conventional design and don't make them so small and 'futuristic' I hate that eggshell looking car. How is a 6'1 guy supposed to fit in that little go kart.

Hmm maybe I should consider a TDI Jetta instead of the GTO next spring (which would be a seasonal vehicle anyways)?

:D

[ 05-11-2004, 02:34 PM: Message edited by: HDMXDiesel0817 ]

[OC_DMAX]

Enjoy reading everyone's views on this topic.

I expect the price for fuels (gas or diesel) to rise over the long term (simply inflation). The frustration level rises for me with these spikes in the prices. Call it supply vs demand, whatever. We seem to be more susceptible to this in California (maybe its the special formulations of fuel we have because of the air quality issues). The "cost" of the final product (to say Shell oil company) is essentially a constant (relative to the price of crude). When I see my cost of diesel fuel going from $1.55 earlier in the year to $2.50 today, I see a windfall of profit going into Shell's pockets (granted, some of this is due to the rise in crude prices). If we are truely dealing with a supply/demand situation, then in a real market driven economy, supply should increase to meet demand. The prices for the product are way above the costs to manufacture the product. However, I do not see new companies appearing in the market place to bring additional supply to market. To the contrary, Shell oil company was trying to shut down a refinery in Bakersfield (thus reducing supply). So I am not sure if we are really dealing with a true market driven economy, but rather one controlled by very large companies.

[Paintdude]

Originally posted by OC_DMAX:
Enjoy reading everyone's views on this topic.

I expect the price for fuels (gas or diesel) to rise over the long term (simply inflation). The frustration level rises for me with these spikes in the prices. Call it supply vs demand, whatever. We seem to be more susceptible to this in California (maybe its the special formulations of fuel we have because of the air quality issues). The "cost" of the final product (to say Shell oil company) is essentially a constant (relative to the price of crude). When I see my cost of diesel fuel going from $1.55 earlier in the year to $2.50 today, I see a windfall of profit going into Shell's pockets (granted, some of this is due to the rise in crude prices). If we are truely dealing with a supply/demand situation, then in a real market driven economy, supply should increase to meet demand. The prices for the product are way above the costs to manufacture the product. However, I do not see new companies appearing in the market place to bring additional supply to market. To the contrary, Shell oil company was trying to shut down a refinery in Bakersfield (thus reducing supply). So I am not sure if we are really dealing with a true market driven economy, but rather one controlled by very large companies. Very well said OC..Look at it this way. Like all big company manufacturing they can have less equipment,less employees if they get a higher price by reducing production. All of this equals more profit..

All I can say is remember all of this when you vote. I havn`t heard much about the Enron crooks doing time for thier theivery. Unions are getting busted,SE`s are taking over the jobs at the plants and the corporations are making more profit than ever before. All of this out of our pockets. I wouldnt mind so much if they would lower the price of goods to match the cost of production they are saving.

This is just my opinion today, for what it is worth..

[Inspector]

I guess the stratagy is working. I would be happy to pay 1.70 per gal. for diesel. I give up nobody seems to be wanting to do anything about this rape so what the heck. I will remember how to vote.
During the Ohio trip three years ago we paid 1.60 a gal in some stations. I thought that was high. It did spike the day after 911 as the oil folks decided that was a good excuse but what would it be like to pay a buck sixty again. Ever notice how fast the price goes up on an excuse such as a holiday and how slowly it retreats. Go figure.
Enough.
Denny

[andrewfessler]

I had 237 gallons of fuel delivered to my home tank today, total cost per gallon was 1.86.

Diesel at the pump around here has recently gone up to 1.79ish.

[Quack_Addict]

Filled up this morning at ~9am.

9 am:
1.999 - Regular
2.089 - Midgrade
2.159 - Premium
1.699 - Diesel

10 am(ish) AT THE SAME STATION
2.139 - Regular
Diesel was still 1.69 (unless the guy had to run inside to get more numbers to change it).

This rates right up there in my book with things like Congress being able to vote on their own pay raises and the never ending road construction here in Michigan on the SAME damn roads they just "fixed" last year.

[Inspector]

Diesel here in Layton, Utah at Flying J is now 203.9. I would love to see it at 169.9 again. See I told you the stradegy was working.
Denny

[dmaxmule]

There is an e-mail going around tring to get people not to buy fuel(gas or diesel) on 5-19-2004. This is an attempt to cause an abundance of fuel thus havoc for the industry. It talks about a lot of money being lost and putting the "ball" back in the consumer's court. I do not know if it will work, but it can not hurt anything, so I will give it a try.

no fuel on 5-19-04 :confused: :mad: :confused: :rolleyes:

[Inspector]

Count me in. :mad:

[Tractor]

Just heard on the truck radio a bit ago that crude oil was at a record high of 41 plus bucks a barrel. That is a 27 percent increase this year.They always got a excuse why it increases. This time they said it was the middle east mess. Could be a oil tanker wreck tomorrow. The oil outfits are some of the most money making buisness in the world. Just check it out on the internet. They are really sticking it to us now.
TRACTOR