DUSTIN BLEIZEFFER Star-Tribune energy reporter | Posted: Saturday, August 19, 2006 12:00 am
GILLETTE - An apparent shortage of diesel fuel has forced stations along Interstate 80 to ration sales at the pump to 50 and 75 gallons per customer and occasionally cordon off pump islands completely.
Some merchants say they suspect refineries are limiting the volume of diesel released to the local market in order to maintain high prices - diesel sold for about $3.21 per gallon on Friday afternoon.
Local refiners, however, say the shortage is due to an industry-wide conversion to the federally-mandated "ultra-low-sulfur" diesel blend, and the situation could last for some time throughout areas in Wyoming, Colorado and Nebraska. Refineries were required to meet the new low-sulfur diesel standards June 1, and merchants are expected to comply by mid-October.
"Certainly it's that (diesel conversion) along with strong demand because of all the drilling, commercial and industrial demand for diesel all across Wyoming," said Bud Blackmore, senior vice president of marketing for Sinclair Oil Corp.
Blackmore said Sinclair's two Wyoming refineries are running at capacity. Sinclair also provides diesel for earth movers working the coal mines in the Powder River Basin. He said Sinclair has maintained delivery to its mining customers, but some of the mines have had to seek additional volumes elsewhere.
"We expect to stay in full diesel mode at those (Wyoming) refineries," Blackmore said.
Doug Aron, vice president of corporate finance for Frontier Oil Corp., said the Frontier Refinery in Cheyenne is also producing diesel at full capacity. It's producing 17,000 barrels of ultra-low-sulfur diesel per day, most of which is distributed along the I-80 corridor.
He said not every refinery in the region has made a full conversion to the new ultra-low-sulfur diesel.
"The process to make ultra-low-sulfur diesel took us several years of planning. And the actual construction just can't happen overnight," Aron said.
Last week, Gov. Dave Freudenthal joined his counterparts in Colorado and Nebraska in loosening restrictions for how many hours fuel truckers can log in a day.
"This action is intended to respond to the diesel shortage and make it possible for both the agricultural community as well as the transportation community to continue to do their jobs notwithstanding the delays in receiving fuel," Freudenthal said in a prepared statement.
PRICES SQUEEZE INDEPENDENTS
"Diesel prices are taking money out of my pocket," Ajit Grewal said on Thursday afternoon while filling up at the Flying J Travel Plaza in Gillette.
Grewal is an independent trucker from Ontario, Canada. He continually checks Web sites to find the most inexpensive diesel prices along his routes. Flying J tends to be one of the cheapest in this area, he said. Still, a trip that used to cost $1,600 in fuel now costs more than $3,000.
"It hurts small truckers because big (trucking) companies can lock in their price," Grewal said.
At $3.22 per gallon, Grewal is paying about 58 cents per mile. He said anything over 45 cents per mile takes a serious bite out of his earnings.
"I'm just not making any money right now, and I've got a mortgage to pay," said Grewal.
Dave Rounds of Youngstown, Ohio, stopped at the Flying J Travel Plaza in Gillette Thursday afternoon to fuel his truck and enjoy a plate of eggs, link sausage, hash browns and white toast. With his arms sleeved in tattoos and a Vietnam Veteran cap on his head, Rounds complained that most Americans don't seem to care about the impact that diesel prices have on the trucking industry.
"I think fuel trucks ought to shut down for a few days, that way stores don't get food, nobody gets supplies Then people might think," Rounds said.
Rounds drives for a trucking company that regularly adjusts its fuel surcharge to pass on costs to customers. But even with a 34 percent surcharge, the numbers aren't balancing out.
Rounds said his company gave him $917 for fuel on his trip from Columbus, Ohio, to Seattle, Wash., and back to Columbus. Rounds had already spent more than $1,300 on diesel by the time he stopped in Gillette Thursday, still a long way home back to Columbus.
"I hope it gets cheaper when I get to South Dakota," he said.
Energy reporter Dustin Bleizeffer can be reached at (307) 682-3388 or dustin.bleizeffercasperstartribune.net.