June 2024 Fuel Market Recap for Portland, Oregon
The diesel fuel market in the Pacific Northwest in June was characterized by tight supply and high prices. Between a limit in refining capacity, dependence on imports as well as seeing prices rise, it resulted in a month of challenges for Portland, OR and the Pacific Northwest fuel market.
Refining Capacity
Refineries throughout the region had maintenance and/or experienced operational issues recently, which reduced the overall diesel production. This includes BP’s Cherry Point refinery which appears to be going through a 50-day turnaround and Tesoro’s Anacortes refinery which is having “intermittent flaring.”
Dependence on Imports
Due to the limited refining stated above, the region also relied more on imports in recent weeks, which included ultra-low sulfur diesel (ULSD) being shipped in from Canada, which is very rare. Typically, the Pacific Northwest is exporting diesel.
High Prices
Limited supply combined with strong regional demand pushed diesel prices to be the most expensive in the country.
The transportation sector likely experienced several impacts related to an increase in transportation costs. Trucking companies, bus operators and other businesses that are related to diesel fuel happen to face much higher operating costs. This ultimately leads to added surcharges where companies may be implementing fuel surcharges to pass on some of that additional cost increase to their customers. Ultimately, it can result in reduced profit margins for businesses that are unable to pass on the full cost increase.
In other cases, you’ll see companies start to shift more into alternative fuels. Businesses with the flexibility to be able to use alternative fuels like biodiesel might have increased their usage to mitigate some of the cost increases. It will be interesting to see how the fuel prices as well as the Portland Renewable Fuel Standard (RFS) will affect companies’ choices in fuel. Alternative fuels like biodiesel and renewable diesel have grown tremendously in the Portland and Pacific Northwest and will continue.
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Industry Insiders Are Talking About A Biofuel Mismatch
Industry insiders are talking about a potential mismatch in biofuel stocks in the Pacific Northwest. Apparently, there’s a surplus of R99, while B99 seems to be harder to come by. The reasons behind this could be anything from swings in the availability of raw materials for each fuel type to shifts in local demand. One thing’s for sure, though: R99 and B99 aren’t exactly created equal, even though they’re both biofuels. R99 seems to be the more reliable and flexible option, but B99 might still hold some appeal in certain situations due to its price tag or specific environmental benefits. This situation could be a chance to fine-tune the biofuel infrastructure in the Pacific Northwest, either by pushing for more R99 use or figuring out ways to get more B99 on the market.
Industry insiders are also keeping a close eye on the recent decline in Renewable Identification Numbers (RINs) and CO2 credits. These tradable certificates serve as a currency for the carbon footprint of fuels. The drop could signal a slowdown in the production or use of cleaner fuels in the region, or conversely, a surge in demand for them. This development could put a strain on refiners trying to meet clean fuel regulations, potentially leading to higher compliance costs. Understanding the root cause of this decline is critical. Is it a regional issue with biofuel production? Or perhaps a broader market trend reflecting increased demand for cleaner fuels? Addressing this situation head-on will be essential for the PNW to maintain its momentum towards its clean energy goals.
Recent Article From gasprices.aaa.com
Here is an article from gasprices.aaa.com about the prices of fuel and what they’re doing right before Independence Day. It discusses the national average gas price increasing by five cents to $3.50. The increase has a high probability that it’s due to the cost of oil rising above $80 per barrel. This time of year, we expect a large number of travelers on the roads to celebrate the July 4th holiday week and weekend. Because who wouldn’t want an excuse for extra time off? This will likely increase the demand for fuel. According to gasprices.aaa.com, the most expensive gas in the country is currently in California, which is at $4.80 per gallon. The least expensive, according to gasprices.aaa.com is currently in Mississippi at $2.91 per gallon. What a difference!
Last year on July 3rd marks a record high price for diesel in the Portland, Oregon area. Today and this week’s current average for diesel in the Portland area is $4.23 per gallon. Reach out to our team about qualifying your business for wholesale fuel pricing.
Here is a comparison of Diesel prices in Oregon compared to the national average as of July 3rd, 2024.
Future Forcasting
While it’s hard to determine a future forecast for fuel prices in the coming weeks, what we can see is that fuel prices are down compared to this time last year. This is great! We do however see a price increase in fuel around this time of year due to the significant higher number of travelers on the roads during summer holidays. Some factors that could result in future fuel price fluctuations would be if the global oil market remained stable or not. The war in Ukraine has also had a great impact on crude oil prices. The war has caused uncertainty in the energy market in the past. The sanctions that the US have on Iran have also had a significant impact on crude oil prices. It has been more difficult for Iran to sell its oil, which has driven up prices in other parts of the world. If the global oil market remians stable and no major refinery disruptions occur, then diesel prices throughout Oregon could potentially stay the same or even decrease slightly over the coming weeks.
Thank you for choosing Star Oilco as your preferred fuel provider in the Portland, Oregon and Vancouver, Washington area. We provide fuel market news to raise value and understanding for our customers. Star Oilco loves supporting businesses in the Pacific Northwest and keeping their tanks full. We keep fuel simple.