West Coast Prices Surge in reaction to strong east coast diesel market -------------------------------------------------------------------------------- Opis alert:

000-01-21 12:22:50 EST

With cash diesel prices still soaring in New York, to the tune of 30cts over the print, West Coast spot diesel is 4-8cts stronger today in a delayed reaction to dramatic spikes seen in East Coast cash markets throughout the week. West Coast reaction to the East Coast feeding frenzy had been somewhat subdued before now. But opinion is clearly shifting based on the latest West Coast spot prices. One key force is the lack of distillates moving to the West Coast, now that the East Coast arb is so attractive. A good volume destined for West Coast markets has been diverted to the East, sources confirm. L.A. CARB diesel is apparently offered at $1 this morning, and bid at 96cts. EPA prices were ranging 85-87cts at presstime. Jet fuel was last called $1.01-$1.04. CARB diesel in the Bay was even to a penny cheaper than L.A., while jet fuel was even. February gasoline, featuring a lower RVP, was talked around 84cts in L.A. Bay gasoline was quoted at 81.5cts.

-- Bill P (porterwn@one.net), January 21, 2000

Answers

Can anyone tell us in plain english what this means? Thanks J.

-- John (timespn@62.com), January 21, 2000.

Interesting Bill. Thanks.

Someone quoted you quoting Harry Shultze.

I am really curious about ALL that Harry Schultze is saying now.

Can you fill us in?

-- Rick (rick7@postmark.net), January 21, 2000.

Sorry, Rick I do not subscribe to his newsletter. I quoted Harry Schultz on this forum in anaswer to a query based on Schultz's quote appearing on www.kitco.com Gold Forum.

-- Bill P (porterwn@one.net), January 21, 2000.

Sure John, I'll try to translate some of this.

'over the print' means spot market quotes are traded at a differential to the NYMEX- the main oil commodity market. So we've all seen Feb NYMEX heating oil skyrocket. The spot market deals (Jan deliveries) are up even more.

The West Coast is a segregated market- no pipes through the rockies so it dances to its own beat unless it gets 20 cents over the Gulf Coast, then its economical to ship through Panama out there.

CARB specs are Calif Specs much tougher than the rest of the country. Calif Air Res Board I think. They've mandated specs beyond the capacity of the West Coast refineries to produce. So the West Coast will have even higher price spikes than the rest of us. MTBE is one of the only way to hit gasoline octanes now that we've removed lead, vapor pressures, reformate, aromatics. CARB diesel the same but mostly lower sulfur specs.

EPA = non urban areas that just meet regular EPA non-CARB specs EPA also= the dumbasses that mandated MTBE.

RVP= Reid Vapor Pressure in gasoline is its ability to vaporize so your car will start. Higher in the winter. Lower in the summer. More expensive to make in the summer so this already tight refining market is probably gonna go balistic when they shift to summer specs and shift over to maxing out distillate to alleviate this current shortage.

Bottom Line= We've environmentally mandated and SUVed past our refineries ability to produce into this perpetually growing domestic demand. There's gonna be new higher price relationships between crude and products- especially in Calif and after MTBE is banned.

Wake up call.

-- Downstreamer (downstream@bigfoot.com), January 21, 2000.

If the TRAINS were running, IMHO there would not be a diesel shortage.

-- Hokie (Hokie_@hotmail.com), January 21, 2000.

Trains are major diesel consumers, not diesel haulers. It's the pipelines that are needed to moce the diesel to where it needs to be.

There probably aren't enough tank cars in North America to move one day's worth of diesel usage. And most fuel terminals took out their tank car unloading facilities and ripped out their siding tracks when they were hooked-up to the pipelines.

WW

-- Wildweasel (vtmldm@epix.net), January 21, 2000.

Hokie,

I believe that the diesel problem is largely a side effect of the heating oil problem. It appears that some of the product that would have been sold as diesel is being sold to the heating oil market.

Jerry

-- Jerry B (skeptic76@erols.com), January 21, 2000.

Sorry, but I just HAVE to try that. =0)

-- cin (cinlooo@aol.com), January 21, 2000.

LOL Cin, how do you do that, oh, I'll view source!!!

-- Andy (2000EOD@prodigy.net), January 21, 2000.

oooooooh, this is fun. i learn so much on this board. =0)

-- amateur http person (just@practicing.com), January 22, 2000.