East Coast retail diesel prices are soaring relative to the rest of the country, propelled by inventories in the region that are almost half of what they normally should be at this time of year
Retail prices recorded in the DTS data series in SONAR tell the story of how much diesel has surged. On Sept. 16, retail diesel in Allentown, Pennsylvania, a major logistics center, was $5.116 a gallon, while the Houston price was $4.513 a gallon, a spread of just over 60 cents. On Oct. 15, Allentown was $5.663 a gallon while Houston was $4.70, a 96.3 cent gap. By Thursday, Allentown was at $6.028 a gallon and Houston was $4.70 a gallon, a spread of $1.328 a gallon.
By contrast, national inventories for all distillates, which are not broken down by specific grades, are running about 80-81% of the five-year average, and that is considered extremely tight by analysts. The Supply Alert also said it was moving the Southeast region to Code Red. Under Code Red, the company is requesting a “72 hour notice for deliveries when possible to ensure fuel and freight can be secured at economical levels.” The step below that, which was implemented for parts of the country during Ian, is Code Orange, requesting a 48-hour window.
For example, as of Friday morning, the Pilot Flying J outlet in Pasadena, Texas, a Houston suburb, was showing a price of $5.199 a gallon. But in Staunton, Virginia, along Interstate 81, a key north-south route on the East Coast, prices were only 20 cents more than that. Head on up 81 a little farther to Carlisle, Pennsylvania, and a gallon of diesel would put you back almost $6.40.
With those kinds of margins, East Coast refiners — a dwindling breed — are rushing to take advantage of it — those that are left.PADD 1 refiners ran at 102.5% of capacity in the week ended Oct. 21, the EIA said, a statistical quirk as refiners find ways to exceed their nameplate capacity. However, it is generally viewed as not sustainable for lengthy periods of time.
Not counted in the EIA figures for the East Coast is the closure of the Come-by-Chance refinery in Canada’s Newfoundland province in 2020. It is being replaced by a renewable diesel facility that will produce 18,000 barrels a day of that product, which can be consumed in diesel engines without any further processing.
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