Diesel Prices (CONT’D FROM PAGE 24)
Green Power Peeking around the corner as a partial solution to die- sel shortages is more production of “renewable diesel,” an eco-friendly product made from vegetable oils and fats.
and another in Mexico which may be producing fuel in 2024.” While the additional supply is welcome, it is mea- ger: “These new refineries will only represent an increase of some 1.5 to 2.0 percent of world capacity.” On the demand side, U.S. consumption is a mixed bag. Upward pricing pressure is coming from the travel sector, where the post-pandemic consumer continues to buy airline tickets in great numbers. “There’s no doubt that increased jet fuel demand has reduced, somewhat, the availability of diesel fuel,” said Lipow. Fuel for the nation’s aircraft is pulled from the same oil pool required for diesel. At the same time, downward pricing pressure has come from the shipping industry. “Freight activity is a big driver of demand for diesel, and thus of prices,” said Schaeffer. “We have been experienc- ing a drop-off in freight demand, which is a result of supply chain issues finally being resolved. We've seen a number of trucking companies go out of business as a result.” Current fuel prices are affected by consumer and busi- ness confidence. Here, again, there is an expectation for reduced diesel demand. “Right now, prices are not necessarily responding to the lower supply situation,” said Cowan. “That's because people are focused on what the economies are going to look like both in the U.S. and abroad over the coming year. Right now it’s a subdued outlook for demand globally.”
“The USEIA is projecting an increase of some 30% in the consumption of renewable diesel in 2024,” said Schaeffer. “That is huge, but most of it is going to displace petroleum usage on the West Coast, primarily in Califor- nia, Oregon, and Washington. All of those states have low carbon fuel policies in place that require refiners to bring in increasing percentages of renewable low carbon fuels into the mainstream pool. Some of that displaced fuel will be available to users elsewhere in the country, so that will help moderate prices.” CONTINUED ON PAGE 28
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