US EIA SAYS DIESEL PRICES HEADING UP FOR THIS COMING FALL

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SkyPup

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NEW YORK8/10/2000 -- Record-high gasoline prices early this summer chased buyers away from the pumps and are helping to push U.S. petroleum-products demand down this year, in the first year-to-year decline since 1991, government forecasters said.

The drop in oil demand follows year-to-year demand growth of more than 600,000 barrels a day, or 3.2%, in 1999 and average growth of more than 350,000 b/d over the past eight years.

The U.S. Energy Information Administration, in a forecast released Tuesday, said it now projects the U.S., the world's largest oil-consuming nation, will use 19.49 million b/d in 2000, down a slight 0.2% from record demand of 19.52 million b/d in 1999. In early June, EIA was projecting demand in 2000 would set a record, at 19.63 million b/d.

U.S. oil demand last registered no growth in 1995, EIA data show.

Record-high gasoline prices in mid June - peaking near $1.69 a gallon nationally and climbing above $2 for some grades in the Midwest - stunted demand, EIA said. Average prices were near $1.15 a gallon a year earlier.

Latest government figures show that through Aug. 4, gasoline demand is down 100,000 b/d, or about 1.2% from a year ago, to 8.277 million b/d.

Sluggish Summer For Gasoline Demand
In the last four weeks, EIA said, gasoline demand is down more than 250,000 b/d, or 2.9%, at 8.645 million b/d, as the peak summer season continues sluggishly compared with the record year-ago pace.

EIA now expects gasoline demand to average 8.41 million b/d this year, down slightly from the record 8.43 million b/d level of a year ago. EIA had forecast in March that 2000 gasoline demand would rise by 1.7% and last month was still forecasting growth of 0.95%, or about 80,000 b/d.

"Our below-normal growth expectations for gasoline demand...have apparently been surpassed, suggesting that the price elasticity of demand for gasoline, while remaining small in the short term, is alive and well," EIA said.

EIA said retail gasoline prices fell in July to an average of $1.55 a gallon, down 8 cents from June's monthly average. Prices in August are expected to go below the July level, and EIA projects December prices will be around $1.33 a gallon, down 30 cents from the June average.

While demand for gasoline is weak and prices are now moving lower, EIA projects the opposite scenario heading into the winter heating season.

"Strong demand for diesel fuel, coupled with low inventories for distillate, will exert upward pressure on distillate fuel prices when the heating season begins in October," EIA said.

Distillate stocks (diesel fuel and home-heating oil) usually grow in the summer, ahead of the peak demand period, but stocks remain low. Total distillate stocks, as of Aug. 4, are 20% below year ago levels, while stocks of high-sulfur variety, used for home-heating, are nearly 39% under year-ago levels, while distillate demand is running 1.9% ahead of the year-ago pace.

Risk Of Winter Heating Oil Price Shock
"There is a risk of price spikes similar to last winter in the Northeast for heating oil as well as for diesel fuel if inventories are not built to adequate levels by the end of the year," EIA warned.

"We are projecting that distillate inventories will grow through November and, by the middle of the winter, the levels will be tight but somewhat higher than those of last year," the agency said. "Still, these projected stock levels will not leave much of a buffer if the winter in the Northeast is unusually cold."

Residential heating-oil prices are expected to average around $1.15 a gallon in the fourth quarter, up about 15 cents from a year ago, EIA said.

EIA said it expects demand for petroleum products from the electric power sector this year to be the lowest ever, eclipsing the weak 1995 level. EIA blamed milder-than-normal weather patterns and higher fuel costs for the drop in demand.

EIA projects, though, that U.S. oil demand will rebound in 2001, as it expects crude oil prices to come down. That means the U.S. won't experience two straight years of decline in oil demand as it last did in 1990 and 1991 when Gulf War oil-price spikes contributed to the economic recession.

The monthly price of crude imported to the U.S. was $27.70 a barrel in July and EIA projects this will fall to $25 by the end of summer because of increased supplies from members of the Organization of Petroleum Exporting Countries.

The $25 level translates to a price of near $27 for U.S. benchmark West Texas Intermediate crude, which is now trading above $30.

The figure also equates roughly with OPEC's $25 target price for its basket of crudes.

Led by Saudi Arabia, OPEC has moved to increase supplies, in large part because of concerns - now apparently verified by EIA projections - that sustained high prices will damage oil demand.

EIA forecasts that the price of imported crude will "gradually decline in 2001, and average about $22 per barrel, more than $5 below the annual average for 2000."

U.S. oil demand is expected to rebound to a record 19.98 million b/d in 2001, a jump of 2.6% from the expected level for this year, according to EIA.

Gasoline demand is expected to climb to a record 8.59 million b/d in 2001, up 2.1%, while set a record 3.71 million b/d, up 2.5%.
 
S

SkyPup

Guest
Even the crappy sulphur-loaded home heating oil is going up. Anyone using this crud in their TDI is looking for serious engine problems
:

"Strong demand for diesel fuel, coupled with low inventories for distillate, will exert upward pressure on distillate fuel prices when the heating season begins in October," EIA said.

Distillate stocks (diesel fuel and home-heating oil) usually grow in the summer, ahead of the peak demand period, but stocks remain low. Total distillate stocks, as of Aug. 4, are 20% below year ago levels, while stocks of high-sulfur variety, used for home-heating, are nearly 39% under year-ago levels, while distillate demand is running 1.9% ahead of the year-ago pace.

Risk Of Winter Heating Oil Price Shock

"There is a risk of price spikes similar to last winter in the Northeast for heating oil as well as for diesel fuel if inventories are not built to adequate levels by the end of the year," EIA warned.

"We are projecting that distillate inventories will grow through November and, by the middle of the winter, the levels will be tight but somewhat higher than those of last year," the agency said. "Still, these projected stock levels will not leave much of a buffer if the winter in the Northeast is unusually cold."

Residential heating-oil prices are expected to average around $1.15 a gallon in the fourth quarter, up about 15 cents from a year ago, EIA said.
 

HowardZ

Top Post Dawg
Joined
Oct 5, 1999
Location
m
I think Skypup should have just listed the url and quote just the best paragragh or two.

It looks like we'll be parking our diesels and driving the gasoline cars this winter.
 
S

SkyPup

Guest
Sorry, I pirated this article from a pay for subscription only world-class site that will not allow a hyperlink without a 100% paid for password. You can take two demerits off my rap-sheet, one for pirateting the post for our forum readers and the other for being a wise-ass.

I just thought it would be nice to share it with the folks on the forums, why I continue to be critized for what others assume or seem to think I should do is beyond me, that's their hassle, not mine.


I quoted out the second section verbatim since most readers are only interested in the facts and don't wish to read all the real world garbage. I usually attempt to point out just the facts and let the reader decide for themselves.

Anyways, looks like diesel fuel will be going up a minimum of 15% at the end of the summer! Thanks to all you oil heat sucking New Englander who haven't upgraded to cheaper natural gas yet!


[This message has been edited by SkyPup (edited August 10, 2000).]
 

HowardZ

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Location
m
Maybe I should stock up on diesel fuel for the winter - like I stocked up on kerosene for Y2K?
 
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SkyPup

Guest
Sounds like a good idea, you could hedge your bet now and scope out NOAA's long range weather forecast for this fall to see how bad it could be. Storing the diesel fuel at a constant temp out of sunlight with stabilizer additive added to it should be good enough preparation for one year.

I'm surprised you did not bite at my stab at the old fashioned New Englanders using all the lousy high sulphur fuel oil to heat their homes? If the Federal Gubmint would run a natural gas pipeline from Texas to Virginia, it would save billions in fuel and pollution and we would have more diesel too!
 

HowardZ

Top Post Dawg
Joined
Oct 5, 1999
Location
m
Skypup: Last year in late summer and early fall I purchased 110 gallons of kerosene. I stored it in many 5 gallon Rubbermaid air tight kerosene containers (same as Rubbermaid gasoline containers except they are in blue color and say "Kerosene" on them so nobody will confuse it with gasoline). I used no fuel stabilizers.

I have had no problems using this kerosene. I still have about 15 gallons left. I usually add 5 gallons of kerosene to every 10 gallons of diesel.

Word where I buy it is that Kerosene is good for at least one year with normal storage. This is also in the instructions for my Kerosene heater.

However, I'm not so sure I'll stock up on kerosene or diesel fuel. I still have my gasoline powered Honda.

P.S. I used most of the kerosene for heating my house. I had very low electric bills because the heat pump didn't need to do much work.

[This message has been edited by HowardZ (edited August 10, 2000).]
 
S

SkyPup

Guest
NEW YORK 8/11/2000-- Crude and products sizzled at the New York Mercantile Exchange
Thursday, shattering one life-of-contract high and closing in on another on
concerns that stockpiles stand at critical levels, analysts said.

September heating oil futures smashed the life-of- contract high at 84.95 cents a gallon to close above 86c/gal, its highest level since Jan. 28.

September crude futures approched its life-of-contract high at $31.55 a barrel before consolidating support just below near $31.48/bbl. Crude futures have gained more than $3 since last week's API and DOE reports first reported a massive draw of nearly 10 million barrels in stocks.

The American Petroleum Institute this week pegged U.S. crude stocks at 282 million barrels, the lowest level since 1976.

The inventory data fueled a fresh wave of optimism and elicited a few whispers of "energy crisis," analysts said.

"Crude and heating oil stocks are at critical levels," said Tim Evans, an analyst with IFR Pegasus, echoing the sentments of many traders.

Global oil inventories, a measure of supply and demand, also remain tight largely because of production restraints implemented by the Organization of Petroleum Exporting Countries over the last two years.

The stocks data comes even as analysts expected more crude oil because of recent increases announced by producing countries. Saudi Arabia said in early July it would boost output by 500,000 barrels a day "soon" to ease high oil prices.

The Saudi move followed two output increases totaling 2.5 million b/d by the Organization of Petroleum Exporting Countries this year. OPEC President Ali Rodriguez recently pegged excess production above quotas at 700,000 b/d.

But the International Energy Agency reported Wednesday that OPEC members, excluding Iraq, turned out only an extra 300,000 b/d in July from June, exceeding their production quotas of 25.4 million barrels a day by a mere 40,000 b/d. Saudi output rose by only 125,000 b/d in July, the IEA said.

Tensions between Iraq and Kuwait also played a role Thursday. Kuwait has heightened alert at some of its military points because of verbal military threats by the Iraqi government, newspapers reported Kuwaiti Defense Minister Sheik Salem al-Sabah as saying.

"It's more grist for the mill," said John Kilduff, senior vice president for Fimat, USA, Inc. "Another element to feed this rally."

Declines in distillate stocks in inventory reports sent September heating oil futures shooting past the life of contract high to levels not seen since the January price spike was tapering off.

Distillate stocks, which include heating oil and diesel fuel, fell to about 28 million barrels, or 20%, below last year's levels during the critical seasonal building cycle ahead of winter.

Analysts say rising demand is keeping the deficit intact as soaring natural gas prices make heating oil a tempting alternative.

Funds stepped up their buying near life of contract highs amid healthy volumes, traders said.

Gasoline futures sizzled on talk of a slew of refinery problems on the Gulf Coast: Exxon-Mobil's Baton Rouge refinery's fluid catalytic crack is down and a rumored problem at Motiva's refinery in Norco, Louisiana (in addition to ongoing maintenance at Convent), traders said. Both companies were seen buying gasoline in the spot market, sources say. Spot deals catapulted prices 2 cents on the day.

On the West Coast, Tosco Corp. also is said to be allocating gasoline supplies to customers, which traders say usually indicates refinery problems.

Overall, Tim Evans, an analyst with IFR Pegasus, described Thursday's session as a "great trading market."
 

Dante

Veteran Member
Joined
Apr 27, 2000
Location
Pacific Northwest
TDI
Silver 2000 Golf GLS TDI
Boyelectric, the cheapest biodiesel I've found in the Paciific Northwest is $2.50 a gallon from Pacific Biodiesel LLC (www.pacificbiodiesel.com I think), so prices would have to go up at least a dollar to kick start the biodiesel industry in the short-term. It might help in the long-term though (but so would paying farmers to grow oilseed instead of nothing).

I just wish I had room for a few 55 gallon drums.
 

Ric Woodruff

BANNED, Ric went to Coventry.
Joined
Feb 19, 1999
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HowardZ:
Maybe I should stock up on diesel fuel for the winter - like I stocked up on kerosene for Y2K?<HR></BLOCKQUOTE>

Don't do that - according to SkyPup, diesel is only good for two weeks!




------------------
Ric Woodruff

Everyone should believe in something...
I believe I'll have another beer!

1998 Jetta TDI Sport
 
S

SkyPup

Guest
Rick, ever hear of diesel fuel stabilizer to slow the oxidation and degradation of the hydrocarbons? What time zone are you from anyways?

Diesel Fuel @ 0 C = 20 years
@ 30 C = <1 year
@ 50 C = < 2 weeks
@ 100 C = < 2 hrs
@ 300 C = < 2 minutes
@ 500 C = < 2 seconds
@ 800 C = < 2 microseconds
@ 1500 C = < 2 nanoseconds


Ric, can you understand this trend or is it way over your head?
 

Ric Woodruff

BANNED, Ric went to Coventry.
Joined
Feb 19, 1999
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by SkyPup:
Rick, ever hear of diesel fuel stabilizer to slow the oxidation and degradation of the hydrocarbons? What time zone are you from anyways?

Diesel Fuel @ 0 C = 20 years
@ 30 C = <1 year
@ 50 C = < 2 weeks
@ 100 C = < 2 hrs
@ 300 C = < 2 minutes
@ 500 C = < 2 seconds
@ 800 C = < 2 microseconds
@ 1500 C = < 2 nanoseconds


Ric, can you understand this trend or is it way over your head?
<HR></BLOCKQUOTE>

Cool!!! Great info!!!

This means that here in "hot" florida, where the ground temperature averages 25 degrees C, our fuel is good for only about 2 years.

Up north where ground temperature averages 5 degrees C, diesel fuel is good for about 10 years!

Wonderful news!!! It was worth getting out of bed this morning
.
 

Ric Woodruff

BANNED, Ric went to Coventry.
Joined
Feb 19, 1999
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HowardZ:
Skypup: Your post was not clear on that. I also assumed your table was for untreated fuel.<HR></BLOCKQUOTE>

I was gonna say that too, but I thought he wouldn't believe me.
 
S

SkyPup

Guest
The reason diesel is going bad is that it is autooxidizing with various peroxides and atomospheric oxygne dissolved in the fuel. Also, diesel fuel is much more prone to BUBBLES which mixes in even more dissolved oxygen into the fuel to oxidize the double bonds and degrade the fuel to LESS BTU's, since the oxygen has already oxidized the fuel and taken BTU's OUT.

Stabilizer slow down the oxidization process even more my self-sacrificing themselves in place of the actual fuel.

That's it kiddos!!
 

HowardZ

Top Post Dawg
Joined
Oct 5, 1999
Location
m
I can't believe it.
I called one of the stations that I like to buy kerosene from and the price is $1.89 while their diesel is $1.41

Usually the lowest kerosene prices are during the summer. However he explained that he got stuck with inventory of high priced kerosene from last winter's shortage. Until the high priced kerosene left over from last winter gets sold he will not purchase more. So now we have an easy way to gauge the age of kerosene - just look at its price.
 
S

SkyPup

Guest
Somebody throw Ric a life preserver since he can't even tread water long enough to keep his face out of it.

Ric, that information is WITH STABILIZERS, not just RAW fuel!

When will you ever be able to guess at least to the at least 1/2 of the 50% percentile level???
It is simply amazing that you can guess with out ever getting anything right?
 

Ric Woodruff

BANNED, Ric went to Coventry.
Joined
Feb 19, 1999
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by HowardZ:
I can't believe it.
I called one of the stations that I like to buy kerosene from and the price is $1.89 while their diesel is $1.41

Usually the lowest kerosene prices are during the summer. However he explained that he got stuck with inventory of high priced kerosene from last winter's shortage. Until the high priced kerosene left over from last winter gets sold he will not purchase more. So now we have an easy way to gauge the age of kerosene - just look at its price.
<HR></BLOCKQUOTE>

Here in Florida, prior to the recent price increases, when diesel was $1.09 a gallon, kerosene was $1.99 a gallon.

Don't worry about the freshness. Some of the kerosene in out lanterns are years old, and they still work.
 

HowardZ

Top Post Dawg
Joined
Oct 5, 1999
Location
m
Skypup: Your post was not clear on that. I also assumed your table was for untreated fuel.
 
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