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11/21/22: SIN DIESEL – A LESSON IN DEMAND DESTRUCTION W/ JAY YOUNG

Ron Patton | November 21, 2022

The United States is experiencing a diesel shortage, particularly on the East Coast, due to multi-year low stockpiles and supply bottlenecks which are increasing the short-term price of a number of consumer goods. The US has become the world’s oil barrel of last resort, single-handedly keeping prices in the energy market from exploding even higher by selling a large chunk of its Strategic Petroleum Reserve. Our government can’t use the reserve forever: it’s a finite stockpile fighting a potentially unlimited flow shortage. Tonight on Ground Zero, Clyde Lewis talks with oil and gas analyst. Jay Young about SIN DIESEL – A LESSON IN DEMAND DESTRUCTION.

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11/21/22: SIN DIESEL – A LESSON IN DEMAND DESTRUCTION W/ JAY YOUNG

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Over the weekend there was plenty of time to read about the top-down chaos that is happening worldwide and the synchronicity of it all.  There is no place to escape. It appears that every republic and democratic republic is in the crosshairs of catastrophic famine and sustainability watches.

Many resources that we assume are eternal are drying up–only to be weaponized by those who engage in world tyranny.

Living and working standards continue to deteriorate worldwide and we are constantly under the threat of having to ration, cut back or go without food, water, and energy.

This is coupled with the growing pressure on everyone to fend for themselves like animals, which is engendering greater insecurity and instability with each passing month. Even worse, no meaningful and lasting relief is on the way, only more suffering. Major corporations, however, are having a field day.

This past week saw G20’s annual meeting taking place in Bali, with the leaders of the world’s 20 largest economies signing a pledge that commits to:

“Reform” food production and distribution

Increase surveillance and censorship of “disinformation” on the internet

Increase global reliance on “renewable” energy sources

Introduce programmable digital currencies

Introduce international digital vaccine passports

Introduce Smart Cities and 15-minute cities in order to curtail the use of automobiles.

It was hard to keep up with all of the plans because of the Rocket that hit Poland, Trump announcing his candidacy for President and President Biden officially becoming an Octogenarian.

We’ve already seen the COP27 and G20 focus on “alternative farming” (ie. lab-grown meat and eating insects), but the G20 leader’s declaration is much more ambitious. And we still have the UN Biodiversity Summit to look forward to.

Yes, the creepy global gathering season is really hitting its stride, and the participants are making no secret of their global plans moving forward.

Their theme was certainly similar to their ideas of Build Back Better– as it was “Recover together, recover stronger.”

You might expect any declaration made under the “build back better” banner to be filled with Great Reset talking points…and you’d be absolutely correct.

There’s a re-dedication to the ongoing war on food, and an echoing of the COP27 focus on “innovation” and “reform” in agriculture and the time to reducer dependence on legacy systems and fossil fuels.

To add insult to injury, the ruling elite are becoming more irrational and putting forward the destruction of the economy as the way out of the crisis, while also openly admitting that they have no idea what to do. They publicly say things like “we are doing a controlled demolition of the economy” and that “we will likely have a hard landing.”

The United Nations Secretary General António Guterres warned everyone at the end of summer that we should prepare for the winter of our discontent.

At the COP27 Summit, the leaders made it clear that “mitigating climate change” means “farming less meat”; “diversifying food sources” means “eating bugs”; and “innovative practices and technologies” means lab-grown meat and/or yeast paste heated by nuclear power.

There’s a lot of material on “reversing” or “mitigating” climate change, including overly verbose pledges to “reform” energy supplies and eliminating some altogether, thus creating manufactured scarcity of oil, gasoline, and diesel.

From the minutes of the world meetings we read

“We reiterate our commitment to achieve global net zero greenhouse gas emissions/carbon neutrality […] scaling up the deployment of clean power generation, including renewable energy, as well as energy efficiency measures, including accelerating efforts towards the phasedown of unabated coal power and fossil fuels.”

There you have it, the New World Order shopping list that includes (but is not limited to): Food reform, pandemic legislation, “cyber security”, CBDCs, and vaccine passports/digital ID and energy reform, .

Nothing surprising, but unusual to see it all laid out in one document like that.

Who thinks destroying a massive complex economy that millions built, operate, and rely on is the way forward? Why is more devastation and waste the only option?

World leaders do and many people are starting to see the writing on the wall.  Food of course is expensive, some of it not making it to the shelves. There are still threats of pandemic legislation being pushed as there are a few who are still falling ill with the Omicron variants and the FTX scandal was timely to shake the confidence of cryptocurrency and make way for CBDCs.

Then there is the problem looms silently over us and that is the lack of fuel to heat homes. fuel to keep the trains running, the planes running, and most important the trucks rolling in to deliver the food to the supermarkets and warehouses.

Just a few days before the midterm elections, a major U.S. supplier of diesel fuel issued a warning about an oil “shortage” on the East Coast and stated that it would lead to an increase in the short-term price of a number of consumer goods. The United States is experiencing a diesel shortage, particularly on the East Coast, as a result of multi-year low stockpiles and supply bottlenecks with reports suggesting that only 25 days of fuel is left in the country’s fuel bank.

According to EIA projections, operational refinery capacity decreased in 2021 for a second consecutive year to stand at 17.9 million barrels per calendar day as of January 1, 2022, which is lower than it was before Covid. When fuel demand fell at the beginning of the epidemic, several U.S. refiners permanently shut down some of their capacity, while others closed down their plants in order to convert them into biofuel refineries.

According to Bloomberg news The US Is Depleting Its Strategic Petroleum Reserve Faster Than It Looks.

The US has become the world’s oil barrel of last resort, single-handedly keeping prices in the energy market from exploding even higher by selling a large chunk of its Strategic Petroleum Reserve. Washington can’t use the reserve forever: it’s a finite stockpile fighting a potentially unlimited flow shortage.

The International Energy Agency back in September warned that “global oil supply may struggle to keep pace with demand next year.”

Over the past year, the White House has sold almost 115 million barrels from its hoard, with the releases surging to a record high of nearly one million barrels per day since mid-May. At the current rate, the US is selling more barrels from its reserve than the production of most medium-sized OPEC countries, such as Algeria or Angola.

At the current pace the reserve has now shrunk to a 40-year low of 358 million barrels.

A year ago, the SPR, located in four caverns in Texas and Louisiana, contained 621 million barrels. As the oil market looks today, it’s difficult to see how we can continue without shortages, Removing that additional supply would mean commercial inventories quickly deplete, putting upward pressure on oil prices.

The White House will be selling crude in November and December, and into next year. But there’s an important catch: Not all of the crude set aside is equal, and what’s left is, increasingly, far less useful than what’s already gone.

Broadly speaking, the SPR contains two kinds of crude: medium-sour, and light-sweet. The first adjective refers to the oil’s density, the second is about sulfur content. Typically, US refiners prefer medium-sour crude, which is denser and has more sulfur but is a variety they can easily process into gasoline and other products.

One of the products that is suffering is Diesel fuel and the additives that are produced so it will burn cleaner,

The price of diesel went above $5.50 a gallon in the beginning of May [2022], and has stayed there ever since, a 70% increase from just a year ago.”

The U.S. economy runs on diesel. It’s what powers the container ships that bring goods from Asia and the trucks that collect goods from the ports and bring them to warehouses and then to your home. The farmers who grow the food you eat put diesel in their tractors to plow the fields, and the workers that bring construction equipment to build your home put diesel in their trucks.

Diesel prices are the highest they’ve been in the U.S. since the government began tracking them, and will likely go even higher,

Diesel supplies have tightened just about every week since Joe Biden became President and could continue to do so as more people fly, drive, and shop during the Holiday season.

It has been reported that even Santa’s sleigh runs on diesel and of it runs dry it will be hard to meet demand for some Christmas gifts this year,

Target and Walmart, which have the scale to lock in better rates with ocean carriers and trucking companies, said they were hurt by the high cost of diesel. Both reported hits to their profits for the most recent quarter because of higher-than-expected freight and transportation costs. Target said it anticipates $1 billion in incremental freight costs this year, as costs in the first three months of the year came in hundreds of millions of dollars higher than planned for.

The high prices to move goods come at a time when many companies say they’re already having trouble finding truck drivers. They might deter owner-operators from driving as many loads, because some freight brokers push back against continuing to raise fuel surcharges. That could lead to an even lower supply of truck drivers. It’s just a matter of math—if you’re not getting paid as much to haul a load, there’s no reason to run that load.

In addition to driving food costs even higher, a shortage of diesel could also suppress food production.

There have been rumors that diesel is depleting at such a rate that there is about 25 days left.  That report was made 25 days ago by Tucker Carlson on Fox news.

According to Data from The Energy Information Administration, today is the day that we will start running out of diesel.

Diesel is not a negotiable commodity. You must have it or everything stops in its tracks. Places in the Northeast are already rationing heating fuel –and there is still a question of how Europe is going to stay warm this winter.

How smart is it to drop fossil fuels or engineered scarcity of those fuels before putting alternative, stable energy sources in place?

The irony is that they wish to starve and freeze people to fight global warming

The U.S. could soon experience a severe shortage of diesel exhaust fluid (DEF), impacting U.S. drivers already hit with soaring fuel prices. DEF is a solution made up of urea and de-ionized water that is needed for almost everything that runs on diesel.

It reduces harmful gases being released into the atmosphere and works by converting nitrogen oxide produced by diesel engines into nitrogen and steam.

The solution is injected into the exhaust stream to limit pollution from diesel engines in order to meet current exhaust emissions standards.

Every diesel truck manufactured since 2010 is required to use DEF. It is also a requirement of many diesel vehicles, including trucks, tractors, buses, RVs, and private vehicles.

Due to out of control war in Ukraine, supplies of urea, a key ingredient in DEF, have fallen.

Russia is a major fertilizer exporter and a top exporter of urea, which is manufactured as a derivative of natural gas. Supplies, therefore, have been impacted by the war.

The global supply of urea was already being impacted by ongoing supply chain issues, but this worsened after the invasion of Ukraine on February 24.

Russia’s government has also weighed suspending fertilizer and urea exports, while China, another major exporter of urea, has placed restrictions on exports.

In 2020, the U.S. imported 4.5 million metric tons of urea, coming in third behind India and Brazil.

We are also facing a point of what economists call “demand destruction.”

Demand destruction is, in economics, what happens when prices for goods are so high that people simply cannot afford them anymore, and they stop buying them. As prices get higher, demand plunges. A Midwest fuel retailer claims demand destruction has already started.

Truck drivers and other observers have been writing me to tell me that they are already seeing pumps that have no diesel or that they are limited in what they can buy.

PolitiFact has been trying to do damage control stating that Tucker Carlson’s report was false– or out of context or some other thing made up for the cover-up.

However, energy industry analysts claim that there is no need for concern because there will not be a shortage of diesel fuel in the United States.

The Joe Biden administration has asked refiners to voluntarily halt exports to rebuild dwindling inventories before winter. They have also asked them to increase deliveries of gasoline and diesel to the Northeast United States.

Regardless if there is a shortage or not, the facts are very clear. The U.S. diesel supply reached its lowest levels since 2008 at the beginning of November and now we are even at lower levels right before the Thanksgiving holiday.

The Energy Information Administration (EIA) reported that distillate inventories were at their lowest levels since 2008. (The primary distillates are diesel, jet fuel, and heating oil).

Distillate demand generally spikes in spring — when farmers are planting crops — and in fall, when they are harvesting those crops and people start buying fuel oil for winter.

But now there is a major shortage of fuel oil, shortage of fuel oil, means a demand in diesel fuel oil, more demand for diesel fuel oil means a shortage — that shortage of fuel means a shortage in food and goods.

The cutoff of Russian imports. Prior to Russia’s invasion of Ukraine, the U.S. was importing nearly 700,000 barrels per day (BPD) of petroleum and petroleum products. Most of those imports were finished products and refinery inputs that boosted distillate supplies in the U.S.

The loss of those Russian imports has caused problems for refineries as they struggle to fill holes in their product slates. Refineries do have a small amount of flexibility in shifting gasoline production to diesel production.

That also means that if refiners do shift production, it potentially creates shortages in the gasoline market.

Again we have to ask the supporters of this war — is this all worth it?

Not only the U.S, but Europe too is struggling to make enough diesel. The continent’s diesel market has come under stress ever since Russia invaded Ukraine and threw into jeopardy Europe’s biggest source of external supply. The 27-nation EU will ban Russian gasoline from February 2023. In the US, distillate inventories, which include diesel and heating oil, are at their lowest point since at least 1993. News agency Bloomberg quoting Wood Mackenzie Ltd., a consultant, said the price of diesel is likely to keep rising relative to gasoline through year-end.

The head of Germany’s Federal Office for Civil Protection and Disaster Relief (BBK), Ralph Tiesler, has warned citizens to prepare for short-term power outages, particularly in January and February, and to stock up on rations in advance.

In the next six months, price increases and shortages of U.S. diesel are likely to emerge unless and until the economy and fuel use slow down. The U.S. Energy Information Administration (EIA) back in October said that the stockpiles of diesel and other distillate fuel oils were just 106 million barrels, the lowest for this time of year since 1982. Distillate inventories were much lower than seasonal averages for the previous ten years by a huge 26 million barrels.

This is what has sparked the fears of shortage– but it should spark the fears of being prepared and getting what food you can for your pantries and having them ready for the coming winter.

You should also invest in more blankets and warm clothing if the power is shut off to conserve energy.

We have to assume that there will be blackouts this winter. By that, I mean a regional and temporary interruption in the power supply. The cause will not only be energy shortages, but also the targeted, temporary shutdown of the networks by the operators, with the aim of protecting the networks and not endangering the overall supply.

Be prepared for possible crises, and don’t assume that everything will be readily available all the time. Things are beginning to become less convenient, and you should be seeing the signs.

 

SHOW GUEST: JAY YOUNG

Jay Young is a fourth generation oil and gas professional. He has a leadership team with over 100 years of combined oil gas exploration development experience and maintains an operating staff of industry specialists, including geoscientists, engineers, field operations, finance, accounting and land professionals.

He’s the author of The Upside Of Oil And Gas Investing.

Written by Ron Patton

Comments

This post currently has 8 comments.

  1. STEPHEN

    November 21, 2022 at 7:34 pm

    BIDEN HAS BEEN COMPROMISED OWNED BY CHINA & NEW WORLD ORDER, AMERICA IS LIKE THE FROG IN WATER SLOWLY TURNING UP THE HEAT TO OUR DESTRUCTION, WE ARE UNDER ATTACK & THE PRESIDENT IS ALLOWING IT TO OCCUR

  2. Rusty

    November 21, 2022 at 8:03 pm

    We can stop it from happening, unless we have a president who is receptive to these ideas. In fact it was the Biden administration that proposed many of these globalist agenda changes via John Kerry at the recent COP27 meeting. Carrie had previously said to reporters that he wouldn’t make any concessions but he reneged and he went along and even proposed and agreed with biden’s proposed concessions consisting of as you know reparations for climate change supposedly inflicted on “poor” countries, a global currency, a global health monitoring system and reward / penalty system etc etc. Many of these concessions were actually proposed by biden’s advisors, I doubt that many originated from biden’s own brain since he’s pretty well burned out but he’s quite happy to go along with all of his lunatic climate crazy anti-prosperity, socialist advisors.

  3. Rusty

    November 21, 2022 at 8:18 pm

    Y
    Your nailing it. I can’t believe how so many people can’t see what’s going on. Even many of the people who are complaining about specific inconveniences, like gas shortages high prices travel restrictions etc they can’t see beyond these little things and connect them together and realize that this is a global movement and the elites are serious about it for whatever their own reasons, which are probably varied, because many of the elites don’t give a damn about climate anyway

  4. Rusty

    November 21, 2022 at 9:48 pm

    The Federal govt, under the Biden administration policies, is not issuing new drilling permits, and the drilling leases are not being approved due to regulations from the Department of Interior and the DOE so the drilling leases are not being approved and therefore no new oil wells can be drilled, these companies always have to drill new wells,vin order to keep the supply increasing; the fault lies in the federal government: over regulation policies the government is trying to kill off the fossil fuel industry.

  5. John Weiner

    November 21, 2022 at 9:56 pm

    Apparently Ukraine passed this investigation, since they still aren’t listed in the top ten most corrupt countries in the world, as I just Googled it. As for the war in Ukraine being a, “proxy war”, of ours, it wouldn’t be the case if Putin hadn’t done his part by invading Ukriane, as a land grab to get all those minerals in the mineral rich, ie, oil, in eastern part of Ukraine, otherwise, other than about 100 billion dollars, I don’t see what Ukraine has of ours that they wouldn’t otherwise have, afterall they have plenty of grains/wheat. This war can end tomorrow if Vladimir Putin declared victory and withdraws. I don’t think Ukraine will wind up in the top 10 most corrupt countries in the world without some convictions in that ,”money laundering,” scandal, otherwise, I think Rusty makes some good points.

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