Has Global Peak Diesel Arrived?

Interesting reading from SRSrocco Report.  Long article, presents quite a bit of information to consider and mull over.

Has Peak Diesel Arrived? The Data Doesn’t Look Good

Has Peaked Diesel arrived?  Well, if so, it is terrible news for the automobile and trucking industry as well as the overall economy.  I came across this information from an article written by Antonio Turiel on his The Oil Crash website.  The article provides some sobering data suggesting that the global production of diesel fuel may have peaked.

Furthermore, due to the peak of conventional oil in 2005 and the considerable increase of U.S. shale light tight oil, the production of heavy fuel oil (not diesel, rather bunker fuel for ships, etc.) has also declined.  Turiel explains in the article The Peak of the Diesel: 2018 Edition, that the refineries cannot make as much diesel from the U.S. light tight shale oil, so they are forced to crack the heavier fuel oil to make diesel.  If true, what we have here is the cannibalization of the refinery system to continue to produce diesel at the expense of the heavier fuel oils.

If Peak Diesel has arrived, Peak Gasoline isn’t too far behind.

...


Hello, this is Steve from the SRSrocco Report.  I believe Turiel is on to something here about the peaking of global diesel production.  I have heard from a few other sources that the refineries are indeed having difficulty in producing quality fuels from combining of tar sands and light-tight shale oil.  The industry thought by combining the heavy tar sands oil and U.S. light shale oil, it would make an average oil blend, similar to good ole fashion medium grade API conventional oil.

However, it has turned out to be a real nightmare as this Tar Sands-Shale Oil blend creates a lot of difficulties for the refineries.  So, it will be interesting to see how the situation unfolds in the global refinery market when U.S. shale oil finally peaks.

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(edited)

Diesel can be made easily enough from coal.  

I predict that the vast world reserves of coal will end up converted into liquid fuels.  It is a mature technology, and still used today by SASOIL in South Africa.  Lost of coal; therefore, lots of diesel  (and gasoline). Of course, somebody has to to spend some coin to get there, but that is why Wall Street is around.  The Street will smell "money" from coal diesel and pump gobs of coin into the processing plants, which will spring up around the countryside just as ethanol plants did,when the Street smelled money in corn to alcohol. 

Edited by Jan van Eck
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Diesel has gone out of fashion in Europe at least for smaller vehicles but what is often over looked are buses. China has of course been the first to adopt on mass electric buses but it's spreading. This is not a insignificant amount, when all EV's are taken in to account the amount of petrol/diesel that is no longer required today is like taking a country as Greece from the market. Most of this is due to electric buses, so therefore diesel.

We may see a slight increase in diesel demand but the next economic downturn will set the ball running down hill.

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9 hours ago, Tom Kirkman said:

Interesting reading from SRSrocco Report.  Long article, presents quite a bit of information to consider and mull over.

Has Peak Diesel Arrived? The Data Doesn’t Look Good

Has Peaked Diesel arrived?  Well, if so, it is terrible news for the automobile and trucking industry as well as the overall economy.  I came across this information from an article written by Antonio Turiel on his The Oil Crash website The article provides some sobering data suggesting that the global production of diesel fuel may have peaked. 

Furthermore, due to the peak of conventional oil in 2005 and the considerable increase of U.S. shale light tight oil, the production of heavy fuel oil (not diesel, rather bunker fuel for ships, etc.) has also declined.  Turiel explains in the article The Peak of the Diesel: 2018 Edition, that the refineries cannot make as much diesel from the U.S. light tight shale oil, so they are forced to crack the heavier fuel oil to make diesel.  If true, what we have here is the cannibalization of the refinery system to continue to produce diesel at the expense of the heavier fuel oils.

If Peak Diesel has arrived, Peak Gasoline isn’t too far behind. 

...


Hello, this is Steve from the SRSrocco Report.  I believe Turiel is on to something here about the peaking of global diesel production.  I have heard from a few other sources that the refineries are indeed having difficulty in producing quality fuels from combining of tar sands and light-tight shale oil.  The industry thought by combining the heavy tar sands oil and U.S. light shale oil, it would make an average oil blend, similar to good ole fashion medium grade API conventional oil.

However, it has turned out to be a real nightmare as this Tar Sands-Shale Oil blend creates a lot of difficulties for the refineries.  So, it will be interesting to see how the situation unfolds in the global refinery market when U.S. shale oil finally peaks.

 

9 hours ago, Jan van Eck said:

Diesel can be made easily enough from coal.  

I predict that the vast world reserves of coal will end up converted into liquid fuels.  It is a mature technology, and still used today by SASOIL in South Africa.  Lost of coal; therefore, lots of diesel  (and gasoline). Of course, somebody has to to spend some coin to get there, but that is why Wall Street is around.  The Street will smell "money" from coal diesel and pump gobs of coin into the processing plants, which will spring up around the countryside just as ethanol plants did,when the Street smelled money in corn to alcohol. 

Side note: the world is using emissions regulations to keep diesel vehicles out of the hands of non-commercial consumers.  This is proving politically convenient in the US, where gas is often <70% the price of diesel.  It's also convenient because non-commercial consumers aren't exactly a savvy - or well capitalized - bunch.  They buy cars as fashion statements, can't afford to replace them once purchased, and complain bitterly about fuel prices. 

Commercial consumers, on the other hand, have teams of engineers optimizing costs and access to business loans.  They also happen to be the best use cases for electrification.  We very well may turn coal into diesel, but I also suspect electrification and efficiency technologies will eat into diesel demand.  The price differential between diesel and gasoline will encourage this. 

It's rather convenient how this is playing out.  If I didn't know better, I'd think someone had planned it. 

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2 hours ago, mthebold said:

 

  The price differential between diesel and gasoline will encourage this. 

 

Another aspect of this is taxes.  I suspect you will find that the multiple layers of taxes on road diesel will create part of that price differential.  If society wanted to, it could alter the tax mix so that diesel at retail was cheaper than gasoline.  

The other interesting aspect of coal diesel is that apparently it is very clean-burning.  

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25 minutes ago, Jan van Eck said:

If society wanted to, it could alter the tax mix so that diesel at retail was cheaper than gasoline.  

Isn't that traditional European approach, higher gasoline taxes than on diesel? 

In the US you could argue diesel was undertaxed if the purpose of the fuel taxes is building and maintaining the roads, where trucks produce a disproportionate amount of the wear and tear on roads. And with fuel economies much better than say, the 60s, transportation fuels are probably undertaxed from a take care of roads perspective. There is also the urban planner wishes for congestion to force mass transit, so an odd collusion between tax-phobes and greenies of a sort. Nothing is straightforward.

In Europe clearly the taxes are much higher, but an reason for slightly lower on diesel was diesel vehicles tended to be commercial purposes, and it was a way of supporting business. 

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2 minutes ago, John Foote said:

 

In the US you could argue diesel was undertaxed if the purpose of the fuel taxes is building and maintaining the roads, where trucks produce a disproportionate amount of the wear and tear on roads. And with fuel economies much better than say, the 60s, transportation fuels are probably undertaxed from a take care of roads perspective. 

In Europe clearly the taxes are much higher, but an reason for slightly lower on diesel was diesel vehicles tended to be commercial purposes, and it was a way of supporting business. 

US roads are built "on the cheap," without the heavy stone foundations you find in Europe.  Thus trucks will "rut" the roads, as the loads tend to be at the maximum level the road was designed to hold.  The result is obvious: roads with ruts and potholes where the truck tires touch. 

You are always going to get political meddling when taxes are concerned.  No tax is ever charged or raised for the limited purpose underlying the stated tax.  For example, the Port Authority of New York charges bridge taxes, and those produce such a river of cash that the Port Authority was able to go build the World Trade Center with it, two buildings with 110 stories. It now costs you twelve bucks to drive across the George Washington Bridge. The NYPA can charge whatever it wants because there is no auto ferry service any more, so no competition. 

Incidentally it is quite possible to rehabilitate rural roads to support heavy trucks by inserting concrete slabs into the asphalt roadway where the truck tires run.  It is an interesting concept:  I am working on setting up a factory to build 20-foot slabs, and the contractor lowers them onto a sand and gravel base and pins them together.  You end up with these two ribbons of concrete with grass in between, to absorb rainwater runoff and that cuts way down on drain maintenance and water contamination.  It is not a new idea; the Germans (no surprise) have been doing this on their busways. Take a look:

2019916748_EssenDedicatedBusRoad.PNG.1dfc04e03c06305f33e302826adaedd6.PNG

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1 hour ago, Jan van Eck said:

Another aspect of this is taxes.  I suspect you will find that the multiple layers of taxes on road diesel will create part of that price differential.  If society wanted to, it could alter the tax mix so that diesel at retail was cheaper than gasoline.  

The other interesting aspect of coal diesel is that apparently it is very clean-burning.  

That does not include the pollutants included in the coal ash waste which is created making liquid fuels. 

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(edited)

13 hours ago, Tom Kirkman said:

Interesting reading from SRSrocco Report.  Long article, presents quite a bit of information to consider and mull over.

Has Peak Diesel Arrived? The Data Doesn’t Look Good

Has Peaked Diesel arrived?  Well, if so, it is terrible news for the automobile and trucking industry as well as the overall economy.  I came across this information from an article written by Antonio Turiel on his The Oil Crash website.  The article provides some sobering data suggesting that the global production of diesel fuel may have peaked.

Furthermore, due to the peak of conventional oil in 2005 and the considerable increase of U.S. shale light tight oil, the production of heavy fuel oil (not diesel, rather bunker fuel for ships, etc.) has also declined.  Turiel explains in the article The Peak of the Diesel: 2018 Edition, that the refineries cannot make as much diesel from the U.S. light tight shale oil, so they are forced to crack the heavier fuel oil to make diesel.  If true, what we have here is the cannibalization of the refinery system to continue to produce diesel at the expense of the heavier fuel oils.

If Peak Diesel has arrived, Peak Gasoline isn’t too far behind.

...


Hello, this is Steve from the SRSrocco Report.  I believe Turiel is on to something here about the peaking of global diesel production.  I have heard from a few other sources that the refineries are indeed having difficulty in producing quality fuels from combining of tar sands and light-tight shale oil.  The industry thought by combining the heavy tar sands oil and U.S. light shale oil, it would make an average oil blend, similar to good ole fashion medium grade API conventional oil.

However, it has turned out to be a real nightmare as this Tar Sands-Shale Oil blend creates a lot of difficulties for the refineries.  So, it will be interesting to see how the situation unfolds in the global refinery market when U.S. shale oil finally peaks.

The higher diesel prices go the better the chance for CNG and LNG to replace diesel to some extent. The existing trucks can be adapted to run on CNG or LNG and the cost will be paid off by the savings within a year or two. Mechanics will have to learn how to deal with the changes also. Many CNG or LNG trucks are already on the market and on the road. 

http://www.ngvglobal.com/blog/cng-fuel-on-upward-surge-in-brazil-1201

http://www.ngvglobal.com/blog/ngv-texas-celebrates-10-years-and-10000-ngv-actions-1123#more-56416

Edited by ronwagn
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6 hours ago, ronwagn said:

That does not include the pollutants included in the coal ash waste which is created making liquid fuels. 

The limited reading I've done on coal ash indicates that most of it contains the same mix of minerals as biomass and dirt - which makes sense, given that coal was once living matter.  That being the case, most coal ash is only toxic if lots of it is repeatedly applied to one area in such a way that allows heavy metals to accumulate.  Or if a flood washes it out of its lagoon.  Those are specific, preventable circumstances.

It's also possible to incorporate coal ash into building materials, like concrete.  Last I checked we already mix ash into building materials - but only in 10-20% of the materials where it's currently viable.  That presents the possibility of just... using all the coal ash.  Problem solved. 

If we want to prevent environmental damage from coal ash, the appropriate way to handle it is to tell coal companies what the public would consider "safe" disposal and then let them figure out the details.

Complaints about coal ash waste somewhat mirror complaints about nuclear "waste".  Nuclear waste is actually usable fuel, and the nuclear plants we built were designed under the assumption that that fuel would be reprocessed and used again.  Financially, they put nuclear "waste" on the books as an asset.  Then Jimmy Carter - in his infinite wisdom - decided that reprocessing it should be illegal, resulting in decades of fuel piling up at nuclear power plants.  Meanwhile, the rest of the world reprocesses. 

If you do the reprocessing correctly, you can even end up with a "waste" material that has less radiation than the uranium you pulled out of the ground - and that after a mere few hundred years.  We have cathedrals that have stood longer than that through war and strife; this problem is solvable. 

 

 

7 hours ago, John Foote said:

In the US you could argue diesel was undertaxed if the purpose of the fuel taxes is building and maintaining the roads, where trucks produce a disproportionate amount of the wear and tear on roads. And with fuel economies much better than say, the 60s, transportation fuels are probably undertaxed from a take care of roads perspective. There is also the urban planner wishes for congestion to force mass transit, so an odd collusion between tax-phobes and greenies of a sort. Nothing is straightforward.

Fuel taxes per vehicle mile traveled have declined significantly over the last 2-3 decades, but politicians haven't bothered raising the tax.  One one hand, the system still functions well enough.  On the other hand, I've seen states taking things into their own hands by building interstate-quality, state-funded highways.  Given the waste and politics associated with federal programs, I imagine state control is a more cost effective solution. 

In Texas, Illinois, and Indiana, sensors installed over the highway at the entrances and exits read your electronic tag and charge you according to your use.  No need to halt traffic at toll booths or pay expensive booth attendants.  The tags cost a pittance, and when your account runs low, they automatically add another $20 or so.  As an added convenience, states often offer reciprocity between their respective systems.  IL tags work in IN, and vice versa.

Personally, I think an electronic toll system is the best long-term plan.  People who drive primarily on non-toll city, county, and state roads will fund those roads via property taxes, which frees them from the financial burden of freeways.  People who travel long-distance via freeways will fund them via tolls, which frees them from the financial burden of other state roads.  As efficiency and the price of fuel both increase, we can leave the existing gas taxes in place to maintain legacy roads and fill those niche cases where neither property taxes nor tolls make sense.  Ultimately, we get an equitable system whose revenue expands in lock step with road use, generating the funding needed for expansions with minimal political intervention. 

 

8 hours ago, Jan van Eck said:

The other interesting aspect of coal diesel is that apparently it is very clean-burning.   

The beauty of any synthetic fuel is that it can be custom designed to the application. 

Crude oil is a mixture of thousands of chemicals.  We do a rough sorting of them with fractional distillation and pile on additives to improve performance, but the end result is a compromise.  We use it because it's there. 

For synthetic fuels, the catalysts are designed to produce the specific molecules we want, allowing us to come much closer to optimal.  The raw materials for all hydrocarbons are the same: hydrogen and carbon.  Engineers start with that and build it into whatever they want.  Lower emissions, volumetric density, mass density, fuel economy, cold climate operation, hot climate operation, high altitude operation, cost - you decide what's important, and they can optimize around it. 

IIRC, gas/coal-to-oil plants were in the planning stages in 2008 before the financial crash.  The Air Force was involved in and excited about this development because widespread, commercial, synthetic fuel infrastructure would enable them to rely on those fuels in time of war - which meant they could design aircraft around those new fuels.  They were talking about increasing the range of existing jets by 10% just by using custom-designed fuel.  Future jet designs could be optimized around the new fuels, further increasing performance. 

For road use, imagine a scenario where light vehicle fleet efficiency improves 5-10% because you can make high-octane racing fuel as cheaply as regular unleaded.  I don't know if that's actually the case, but it could be.  We should give synfuels a chance and see what happens. 

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