Diesel Outages Starting To Rise In Southeast On Back Of Colonial Closure

Major fuel suppliers in the Southeast are starting to list an increasing number of outlets with no diesel supplies as the shutdown of Colonial Pipeline heads into its sixth day. 

While the market waits for an expected announcement Wednesday evening regarding whether Colonial believes it can safely restart its line after last week's cybersecurity attack, conditions for truck drivers on the ground aren't getting any easier. 

Three companies that list online the available supplies at their outlets are reporting varying degrees of outages of diesel as well as gasoline. On Tuesday, the talk of fuel running out was focused on gasoline. But the shutdown of the line is clearly starting to hit diesel.

The three companies and their situation:

— Racetrac, the fuel retailer and convenience store chain, reported about 65 of its outlets Wednesday morning with no diesel supplies. That is out of a total of approximately 750 outlets.

— Love's reported three facilities with no diesel supplies. (By contrast, it listed 10 Love's outlets with no gasoline supplies.) However, Love's also published a long list of Southeastern stores that it said are "at risk of fuel outages," without specifying diesel or gasoline. That list totaled more than 35.

— Pilot Flying J reported two stations with no gasoline or diesel, but in a post published Tuesday said that both outlets — in Conover and Monroe, North Carolina — were to receive diesel deliveries overnight. There were no diesel supplies at five outlets, but three of them also were to get a diesel delivery overnight. Five Pilot/Flying J outlets were listed as having diesel but no gasoline. 

The information service GasBuddy, which monitors prices and sales at the pump, has been publishing information on gasoline outages on the Twitter feed of its top editorial executive, Patrick DeHaan. DeHaan on Wednesday morning said 15.4% of all gas stations in Georgia are out of gasoline and almost 25% of all stations in North Carolina are out. However, GasBuddy's focus has been on gasoline, not diesel. 

DeHaan tweeted Wednesday morning that he was only seeing "slight" outages at the wholesale distribution point, known as the rack. What that could mean, he said, is that getting drivers to take fuel from the rack to the outlets is the real problem. "This seems to be turning into a not-enough-truck-drivers-to-get-it-there story," he wrote.

Lest anybody think that no fuel is getting delivered, Colonial put out a statement late Tuesday that said the line has delivered about 41 million gallons, of 967,000 barrels, to several delivery points on the line. But the 967,000 barrels is over the several days since the shutdown, and the daily throughput on the line is measured in the millions of barrels. Colonial also said it has taken delivery of 2 million barrels out of refineries that can be put back into the system when it resumes. 

Meanwhile, wholesale diesel prices in Atlanta, right at the center of the outage, have been moving higher at a rate far greater than increases in the ultra-low sulfur diesel price on the CME commodity exchange.

The average wholesale diesel price in Atlanta, according to the ULSDR.ATL data series in SONAR, rose to $2.05/gallon on May 7, the day the pipeline closure was first disclosed, from $1.983/g at the start of the week. That almost 7 cent gain was only slightly more than the increase on the CME of roughly 6 cents/g.

In the two trading days since then, the ULSD price on CME–which is for barrels delivered in June in New York harbor–rose just over 3 cents/g. But since May 7, which was last Friday, wholesale diesel prices in Atlanta have tacked on 9.5 cents/g.

To learn more about FreightWaves SONAR, please go here.

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