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.

  • Like 1

Share this post


Link to post
Share on other sites

(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
  • Like 1

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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.  

Share this post


Link to post
Share on other sites

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. 

  • Like 1

Share this post


Link to post
Share on other sites

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

  • Like 1
  • Upvote 1

Share this post


Link to post
Share on other sites

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. 

  • Like 1

Share this post


Link to post
Share on other sites

(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
reference
  • Like 2

Share this post


Link to post
Share on other sites