A diesel crisis could slam the economy - AT

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July 11, 2022

A diesel crisis could slam the economy

By John M. Contino U.S. oil refineries are running at 94% capacity. They are refining one million barrels of oil per day less than in 2020, due in part to a conversion to biofuels and an industry move towards a "net zero carbon strategy," which means less investment in refineries that use hydrocarbons. An explosion in the Philadelphia Energy Solutions refinery in 2019 closed that refinery permanently. The capacity of existing refineries has been expanded over the years, but a major refinery hasn't been built in the U.S. since 1976.

A crisis more serious than $5 gasoline may be brewing, and it revolves around diesel fuel. Diesel engines power not just the big rigs on the road, but all the trains that supply coal to electric power plants and fertilizer to farms. Most tractors and combines run on diesel, as do fire trucks, ambulances, and military vehicles. Many of the mammoth vessels that transport shipping containers across the oceans are powered by huge diesel engines, and the furnaces of some older residential and commercial buildings burn diesel.

Diesel engines require diesel gasoline, diesel oil, and diesel exhaust fluids (DEF), and shortages of the last two items may be reaching a critical stage. Since 2010, the government has required DEF to be injected into the exhaust stream from diesel engines to meet current emission standards. From Newsweek: 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 ... works by converting nitrogen oxide produced by diesel engines into nitrogen and steam ... 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.

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Natural News has listed some manufacturers of diesel engine oil additives who, unable to get the chemicals required for the additives, have either suspended operations through a declaration of force majeure or experienced supply chain disruptions in their operations.

The so-called "base oils" are not reportedly in short supply, but the chemical additives — rust inhibitors, anti-foaming agents, dispersing agents, etc. — have suffered extreme supply chain problems, leading to production shortages for the final oil product. There are also shortages in packaging materials used to hold, transport and dispose of chemical additives.

The article goes so far as to predict that stocks of these chemicals will run out in as little as eight weeks. It's hard to believe that the situation is as dire as that, but an oil-additive supply crunch does appear to be imminent and serious.

California, meanwhile, is doing what it can to lower the demand for diesel fuel. Natural News reports that 70,000 independent truck-drivers will be forced off the road by California's Assembly Bill 5, which outlaws independent truck-drivers who are "owner-operators" — that is, not full-time employees of a corporation. This law was passed in 2019: "California Assembly Bill 5 (AB5), popularly known as the 'gig worker bill,' is a piece of legislation that went into effect on Jan. 1, 2020, and required companies that hire independent contractors to reclassify them as employees."

Truck-drivers had won a temporary reprieve from the law, but that reprieve is now gone: Earlier this week, the United States Supreme Court denied review — or Certiorari — of the Circuit's reversal against the injunction of AB5 (Assembly Bill 5) in California, a law governing owner-operators that potentially could be very disruptive to trucking operations in the nation's most populous state.

AB5 is a boon for union shops (and the law's Democrat sponsors), as union dues routinely get laundered into the coffers of Democrat politicians through political donations.

Shipping ports dot the California coastline from San Francisco to San Diego, and transport trucks carry ocean freight containers inland from those ports. The Central Valley produces 30% of the country's fruits and vegetables. AB5 will significantly impact the already strained supply chain for the entire nation. So far, there's been not a peep from the Biden administration to pressure California to back off. One wonders if Transportation secretary and presidential hopeful Mayor Pete has an opinion on this; he has the time to opine on the protesters who disrupted Justice Kavanaugh's dinner.

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