EIA Publishes Monthly Biodiesel Production Data for 2010 and 2011

U.S. production of biodiesel was a record 109 million gallons in December 2011, according to new data released by the U.S. Energy Information Administration (EIA). Production came from 113 active biodiesel plants. Biodiesel production for all of 2011 was 967 million gallons, which was the highest level recorded since EIA began tracking this data. Biodiesel fuel is mainly used for transportation, similar to diesel fuel.



Monthly biodiesel production had both sharp increases and decreases in 2009 and 2010 due in part to the expiration and reinstatement of Federal tax credits and renewable fuels standards affecting biodiesel. After reaching 64 million gallons in November 2009, biodiesel production fell following the expiration of the blending tax credit of $1.00 per gallon at the end of 2009. With the December 2010 reinstatement of the blending tax credit effective through December 2011 and increased requirements for biomass based diesel under the renewable fuels standard, production rebounded from a low of 22 million one year before.

Annual biodiesel production was 516 million gallons in 2009. Production fell to 343 million gallons in 2010 but then rebounded to 967 million gallons in 2011.

Soybean oil was the largest biodiesel feedstock in 2011, at 4,136 million pounds consumed. The next three largest biodiesel feedstocks during 2011 were canola oil (847 million pounds), yellow grease and other recycled feedstocks (665 million pounds), and white grease (533 million pounds).


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EIA: U.S. Refineries and Blenders Produced Record Amounts of Distillate Fuels

Source: U.S. Energy Information Administration, Weekly Petroleum Status Report.
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U.S. refiners produced historically high volumes of distillate fuels (a category that includes both diesel fuel and heating oil) and motor gasoline in 2011. By fine-tuning their production mix, refineries consistently set record levels of distillate production, most recently topping 5 million barrels per day (bbl/d) for the weeks ending December 2 and December 16, 2011.

In 2011, weekly distillate production was above the five-year historical range 25 times, and ranked second highest an additional 19 times. Finished motor gasoline production was robust over the same period, but was slightly more in line with production volumes at comparable times of year since 2006.

Because of its chemical composition, crude oil run through a refinery typically yields roughly twice as much motor gasoline as distillate fuels. Therefore, regardless of economic or other incentives, refiners cannot completely stop making some finished petroleum products in favor of others. However, by adjusting downstream processes and the types of crude oil used, refineries can optimize production to fine-tune the balance of their finished products output. For much of 2011, refiners saw favorable margins and robust global demand for distillate fuels. In order to benefit from these trends, refineries:

• Increased crude runs to maximize overall output. This explains why both motor gasoline and distillate fuels production levels are high relative to the five-year historical ranges.
• Shifted production mix. This explains why the distillate fuels production levels exceeded historical ranges in more weeks than motor gasoline production did.
• 
  

Since early October, the spot price for ultra-low-sulfur distillate fuel oil rose, while the spot price for motor gasoline (as measured by New York RBOB spot prices in the chart below) declined, widening the spread between these two petroleum product prices. On November 14, 2011, the spot price for ultra-low-sulfur distillate was nearly 65 cents per gallon higher than the spot price for RBOB. The spread between these product prices had not been more than 60 cents per gallon since November 2008.

Source: U.S. Energy Information Administration, based on Bloomberg.

Note: Ultra low sulfur distillate spot prices shown as New York ultra low sulfur distillate spot prices; motor gasoline prices reflect New York RBOB spot prices.

Along with high domestic prices, strong international markets for distillate fuel oils have spurred increased production. In the United States, refineries have typically optimized production for finished motor gasoline to meet high U.S. demand. European refineries, on the other hand, tend to produce higher percentages of distillate fuel oils, as diesel is used more broadly there for transportation.

 Due to crude supply disruptions to European refineries for much of this year, the region has imported more finished products. Weekly U.S. gross distillate export estimates (bound primarily for European and South American markets) were at record levels in the fourth quarter of 2011, topping more than 0.9 million bbl/d in October and November, and exceeding 1 million bbl/d in December.

Robust global distillate demand has led to a significant inventory draw, despite heightened U.S. production. From the end of September to the end of December, U.S. distillate inventories fell by more than 13 million barrels.

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Rigzone: Crude Slides 2.1% On European Debt Worries

Crude oil futures fell 2.1% to near $98 a barrel Thursday, posting the biggest decline in three weeks on continued worries about Europe's sovereign debt.

Prices had posted early gains, approaching $102 a barrel, after a larger than expected drop in new claims for U.S. jobless benefits. The Labor Department said benefits filings in the week ended Dec. 3 fell by 23,000 and were at the lowest level in nine months. Economists had expected a 7,000 decline in the week.

But the weight of concerns, as European leaders begin a two day summit meeting, hit equities price and crude tumbled. Oil, like all global markets, has been gripped by concerns in recent months that the crisis in European could trigger a global economic slowdown.

Those concerns were especially evident in the heating oil futures market Thursday, traders said, as prices fell to their lowest level since Nov. 25 on fears of a potential slowdown in U.S. exports of related diesel fuel. Latest U.S. government data show that 42% of record high exports of distillate fuel (diesel/heating oil) in September were bound for Europe.....Read the entire article.


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EIA: Recent Gasoline and Diesel Prices Track Brent and LLS, not WTI

Since the beginning of 2011, the spot price of West Texas Intermediate (WTI) crude oil, a traditional benchmark for the U.S. market, has trailed the spot price of other crude oils, including Brent, a global benchmark, and Louisiana Light Sweet (LLS), a Gulf Coast crude oil similar to crudes run by many U.S. refiners. Because few U.S. refiners have easy access to WTI crude oil, this price divergence has not directly translated to lower prices for U.S. refined petroleum products, such as gasoline and heating oil.

Instead, these product prices have more closely tracked the prices of Brent and LLS. Through October 25, the prices of Brent and LLS are up 20% and 18% in 2011, respectively; the prices of wholesale diesel fuel and gasoline on the U.S. Gulf coast are up 21% and 13%, respectively; meanwhile, the price of WTI is up just 2%.

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Bloomberg: Contango on Mideast Oil Disappears on China Diesel Squeeze

The 1 month old contango in Dubai oil, the benchmark grade of crude for Asia, has disappeared as a shortage of diesel in China puts a premium on the quickest deliveries of fuel. The December contract was 15 cents a barrel more expensive than January’s today, reversing a discount that’s been in place since July 2009, according to data from PVM Oil Associates, a London based broker.

A shortage of diesel in China is pushing up the premium for the fastest deliveries of oil as the nation curbs power use under a plan by Premier Wen Jiabao to cut electricity consumption per unit of gross domestic product by 20 percent in the five years through 2010. Stockpiles in the country, the world’s biggest energy user, fell for a seventh month in October, according to data from China Oil, Gas & Petrochemicals, a publication of the state owned Xinhua News Agency.

“China’s got to be short” of crude oil, said Alex Yap, an analyst at FACTS Global Energy in Singapore. “If they want to do any restocking from November to December, they’ll have to be importing a lot for the next couple of months.”

Oil imports dropped 30 percent to a 17 month low of 16.4 million metric tons in October, or about 3.9 million barrels a day, the General Administration of Customs said Nov. 22. Diesel inventories declined 11 percent to about 6.2 million tons in October, data from Xinhua News showed on Nov. 22. They were 11.5 million tons in February......Read the entire article.


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Dian L. Chu: 131 = The Number of Years to Replace Oil

It seems the panic time for both green enthusiasts and peak oil pundits. According to a new paper by two researchers at the University of California–Davis, it would take 131 years for replacement of gasoline and diesel given the current pace of research and development; however, world's oil could run dry almost a century before that. The research was published on Nov. 8 at Environmental Science & Technology, which is based on the theory that market expectations are good predictors reflected in prices of publicly traded securities.

By incorporating market expectations into the model, the authors, Nataliya Malyshkina and Deb Niemeier, indicated that based on their calculation, the peak of oil production could occur between 2010 and 2030, before renewable replacement technologies become viable at around 2140.
The estimates not only delayed the alternative energy timeline, but also pushed up the peak oil deadline. The researchers suggest some previous estimates that pegged year 2040 as the time frame when alternatives would start to replace oil, could be “overly optimistic".

As I pointed out before, despite the excitement and hype surrounding a future of clean energy, a majority of the current technology simply does not make economic sense for regular consumers and lack the infrastructure for a mass deployment….even with government subsidies, tax breaks, and outright mandates. In addition, the supply chain of renewable technologies is not as green as people might think. Most alternative technologies rely on rare earths for efficiency. However, the......Read the entire article.


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Phil Flynn: French Fried

Alright, I admit it was kind of fun snickering about the French Strikes. You know like joking about the French work ethic (assuming they had one). You know the routine. The French have been striking and staging mass protests that have turned violent as the government moves to take away French entitlements they cannot pay for. The French are to vote on raising the retirement age from 60 to 62 (Sidérer!!!). With an aging French population and years of the government giving the country free goodies, the government is going to have to make much needed reforms or face an inevitable economic collapse.

The strikes have shut down 12 oil refineries in France leading to shortages of diesel and gasoline. The International Oil Daily Reported that, “lost French production is driving dramatic price gains in diesel and jet fuel in Europe, France’s 12 oil refineries, all but one of which has been shut down by national strikes, produce around 60,000 tons of diesel and 30,000 tons of jet a day. But even with refineries at full production, the country is a net importer of both products. Minimal domestic production means France is sucking in products from neighboring Germany, Italy and even Spain, as well as drawing from strategic......Read the entire article.


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Crude Oil Rises After Report Shows U.S. Fuel Demand Increase

Crude oil rose after a U.S. government report showed that fuel supplies dropped as consumption increased to the highest level since February. Fuel demand climbed 3.1 percent to 19.3 million barrels a day last week, the highest since the week ended Feb. 27, the Energy Department said today. Supplies of distillate fuel, a category that includes heating oil and diesel, fell 1.14 million barrels to 161.5 million. Gasoline stockpiles declined and crude oil inventories climbed. “The market is getting support from the demand number, particularly the increase in distillate demand,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.....Complete Story

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China Increases Diesel, Gasoline Prices to Help Oil Refiners

China, the world’s second biggest energy consumer, will increase fuel prices by as much as 11 percent today, allowing the nation’s refiners to pass on climbing crude oil costs. Prices for gasoline and diesel will rise by 600 yuan ($87.80) a metric ton, the National Development and Reform Commission said yesterday, the third increase this year. Jet fuel costs will rise by 620 yuan a ton. China’s consumer prices fell for a fourth month in May.....Complete Story