Tag Archive for: energy crisis

The Country Is In The Middle Of A Diesel Crisis — And The Biden Admin Is Making It Worse, Experts Say

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UPDATE:

  • The Biden administration’s policies reduced diesel production and caused stockpiles to fall to dangerously low levels, experts told the DCNF.
  • “There’s an enormous tax and regulatory burden that the Biden administration has put on refining along with other industries,” Josh Young, chief investment officer and founder of energy investment firm Bison Interests, told the DCNF.
  • “At the moment refining capacity cannot meet demand, even when we have enough oil,” Institute For Energy Research Senior Vice President Dan Kish told the DCNF. 

The Biden administration has implemented policies that have hurt diesel production and caused stockpiles to hit their lowest levels since 2008, experts told the DCNF.

The U.S. is facing a diesel shortage which is causing the Biden administration to consider taking action to shore up supplies as fuel refiners struggle to produce enough fuel to meet heavy demand. Diesel supplies have become dangerously low due to recent refinery closures that have been exacerbated by the Biden administration’s regulations as well as increased fuel demand following the coronavirus pandemic, experts told the DCNF.

“There’s an enormous tax and regulatory burden that the Biden administration has put on refining along with other industries,” Josh Young, chief investment officer and founder of energy investment firm Bison Interests, told the DCNF. “Emissions rules and general regulations have increased tremendously under the Biden administration, raising operating costs and causing some refineries to either shut down or not expand operations.”

“There’s an enormous tax and regulatory burden that the Biden administration has put on refining along with other industries,” Josh Young, chief investment officer and founder of energy investment firm Bison Interests, told the DCNF. “Emissions rules and general regulations have increased tremendously under the Biden administration, raising operating costs and causing some refineries to either shut down or not expand operations.”

Crude oil, which is pumped in the U.S. or imported, must be processed at refineries to produce distillate fuels like diesel and gasoline. The Biden administration has continuously imposed environmental policies to cut carbon emissions and achieve “environmental justice” which have damaged refiners’ output.

Limetree Bay Energy in June closed down its U.S. Virgin Islands refinery, a facility that could process 210,000 oil barrels per day, as it could not afford to install special emission monitors that were mandated by the Environmental Protection Agency, according to Reuters. The refinery reopened in February; however, in May the EPA forced the plant to temporarily close and ordered the plant to install 18 sulfur dioxide and hydrogen sulfide monitors before it restarted operations.

The EPA in April rescinded exemptions that would have allowed over 30 refiners to avoid blending renewable biofuels into diesel even though refiners claimed that this would hike costs and decrease output, according to an agency docket. Companies in the U.S. have also not built a major oil refinery in 50 years due to regulatory concerns and anticipation that the green transition will kill demand for fossil fuels.

The coronavirus pandemic, which shut down economic activity, has also contributed to diesel shortages, according to Patrick De Haan head of petroleum analysis at GasBuddy.

“COVID caused demand to suddenly plummet to the point where refineries started to idle and companies shut down their facilities back in 2020,” De Haan told the DCNF. “As we recovered from COVID there was a surge in demand that we saw for not only diesel but other products as well and that’s put us in a situation where we have only 25 days of distillate supply remaining.”

Diesel demand recovered much faster than refiners anticipated, meaning that production has to catch up to meet demand, Institute For Energy Research Senior Vice President Dan Kish told the DCNF. The U.S. has lost more than one million barrels per day of refining capacity since 2020, according to the Energy Information Administration.

“At the moment refining capacity cannot meet demand, even when we have enough oil,” Kish said.

White House National Economic Council Director Brian Deese said on Oct. 19 that the administration is “very concerned” about diesel shortages, particularly in the northeast of the country, and indicated that the White House may limit or ban exports of refined petroleum products. The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, two industry groups, sent a letter to Energy Secretary Jennifer Granholm on Oct. 4 claiming that an export ban would exacerbate shortages.

“An export ban would distort the market and essentially force refineries out of business which is the opposite of what is needed right now,” Young said.

The administration could also deploy the Northeast Home Heating Oil Reserve’s one million barrels of diesel to address shortages in New England. However, because diesel demand is so high, the reserve’s supply would last less than six hours, according to The Washington Post.

Diesel inventories are in good shape when there are around 35 to 40 days of supply available; however, when there are just 30 days of supply left or fewer, problems can start to arise, according to Mansfield Energy. When there are only 25 days left of diesel supply, there is not enough fuel to keep industries operating if supplies are significantly disrupted, as fuel must be delivered via pipelines, meaning that vast quantities of fuel are days or weeks away from getting to where they need to be.

Diesel demand will further increase as cold weather approaches since 82% of households use diesel to heat their homes during the winter, according to the EIA.

“As NOAA’s forecasts warmer-than-average temperatures in the Southeastern U.S. and along the Atlantic coast this winter, DOE remains fully engaged and partnered with state, industry, and interagency partners as the country prepares with the winter season,” an Energy spokesperson told the DCNF.

The White House did not immediately respond to the Daily Caller News Foundation’s request for comment.

AUTHOR

JACK MCEVOY

Energy & environmental reporter.

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

‘Will Not Fix The Problem’: Biden Releasing Oil Reserves Due To Politics, Critics Say

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  • President Joe Biden’s decision to tap the U.S. Strategic Petroleum Reserve (SPR) was derided by top GOP lawmakers and experts who said the move was political and won’t move the needle on gasoline prices.
  • “Even if the economic reality of five or maybe 10 cents a gallon of short term impact isn’t that big of a deal, doing nothing might look like a really big political problem,” Kevin Book, a National Petroleum Council member and managing director of ClearView Energy Partners, told the Daily Caller News Foundation.
  • The federal government will release 32 million barrels of oil from the SPR and accelerate the release of 18 million barrels that had already been congressionally mandated, the White House announced Tuesday.
  • “This very temporary measure is not going to solve the supply issue at the pump nor is it a solution to gas prices that have doubled in the last year,” Rep. Fred Upton, the top Republican on a House energy subcommittee, told the DCNF.

President Joe Biden’s decision to tap the U.S. Strategic Petroleum Reserve (SPR) was derided by top GOP lawmakers and experts who said the move was political and won’t move the needle on gasoline prices.

The federal government will release 32 million barrels of oil from the SPR and accelerate the release of 18 million barrels that had already been congressionally mandated, the White House announced Tuesday. Biden’s move to release crude oil from the nation’s emergency reserves was made alongside China, India, Japan, South Korea and the U.K., marking the first internationally coordinated release of emergency oil reserves.

However, experts suggested that the action was likely a political reaction to ever-rising prices at the pump and said it wouldn’t have a significant long term effect.

“It’s possible to say, ‘okay, this is something that politically, if not economically, requires intervention.’ The problem might be that, actually they started talking about doing something back in August,” Kevin Book, a National Petroleum Council member and managing director of ClearView Energy Partners, told the Daily Caller News Foundation.

“The White House was aware of these rising prices and concerned about them, and started taking steps towards intervention and created an expectation for intervention,” he continued. “So, even if the economic reality of five or maybe 10 cents a gallon of short term impact isn’t that big of a deal, doing nothing might look like a really big political problem.”

Book added that the release would have a minimal effect on oil prices, which had already declined over the last several weeks as reports of such a move became public. The price of oil is expected to decrease in the next couple of months due to normal seasonal market fluctuations, according to Book.

A Goldman Sachs report published last week echoed Book’s comments, arguing that tapping the SPR is a “short-term fix to a structural deficit” and was already priced-in to the market. Oil prices may even increase more than expected due to the move, the report concluded.

Biden even acknowledged that he doesn’t have a near-term fix for higher prices and that tapping reserves would barely have an effect during a CNN town hall in October. His administration has mulled an SPR release for months.

But, like Book, Chamber of Commerce Global Energy Institute Senior Vice President Christopher Guith said Tuesday that the White House should focus on long term policies rather than “ineffectual band aids.”

‘A cynical move’

Biden, meanwhile, has faced heavy criticism for his administration’s anti-fossil fuel actions, which include revoking the Keystone XL pipeline permit and banning new oil and gas leases on federal lands. While the president has set ambitious clean energy goals, gasoline prices have risen to their highest level in nearly a decade, government data showed.

Gas prices are tightly tied to the price of crude oil.

“This very temporary measure is not going to solve the supply issue at the pump nor is it a solution to gas prices that have doubled in the last year,” Michigan Rep. Fred Upton, the top Republican on a House energy subcommittee, told the DCNF.

The SPR was established in the 1970s as a tool to help the U.S. survive future energy crises where the global supply of oil dried up. The total inventory is estimated at around 604 million barrels of oil which is kept in deep underground storage caverns in Texas and Louisiana.

The last time the U.S. tapped the SPR was in 2011 when former President Barack Obama ordered a strategic release amid the Libyan civil war, a move that disrupted the Middle Eastern nation’s oil exports.

“President Biden’s policies are hiking inflation and energy prices for the American people,” Senate Energy and Natural Resources Committee Ranking Member John Barrasso said in a statement. “Tapping the Strategic Petroleum Reserve will not fix the problem.”

“We are experiencing higher prices because the administration and Democrats in Congress are waging a war on American energy,” he continued.

Dan Kish, a senior fellow at the Institute for Energy Research, said the move was like someone eating everything from the pantry then “shooting the farmers.”

“This is a cynical move by a guy who’s done everything in his power to restrict production here at home and in North America,” Kish told the DCNF. “All the while watching Russia become our number two supplier of foreign oil.”

Kish noted that oil prices have increased since Biden announced the release, a sign that it would have little effect on gasoline prices.

Republican Whip Steve Scalise said the SPR is strictly for emergency purposes in response to a question from the DCNF during an October roundtable. If Biden wanted to lower prices, he would make it easier for firms to drill and construct domestic pipelines, the Louisiana Republican added.

“The SPR is not to be used as a piggy bank just to bail you out when your failed policies create higher gas prices,” Scalise said.

“The answer is very straightforward and it’s right under our feet,” he continued. “Instead of trying to drain what’s left of our reserves, we ought to be producing more energy and creating more jobs here in America to take leverage away from OPEC countries and to take leverage away from Russia.”

COLUMN BY

THOMAS CATENACCI

Energy and environment reporter. Follow Thomas on Twitter

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.