Welcome to the Fuel Matters Blog

As everyone woke up to the first punch of winter weather this morning, as a fuel distributor, it certainly makes us think about the low level of diesel inventories in PADD 1 and the potential impact it will have on our customers this winter.

Analysts are getting increasingly worried that the refining industry will not be prepared in time to meet the lower sulfur regulation under the new International Maritime Organization (IMO) set to begin January 1, 2020 and will subsequently increase diesel prices in relation to crude oil.

According to a survey by the Federal Reserve Bank of Dallas, the cost of profitably drilling a shale oil well in the US has fallen to a modern low of $50 per barrel, likely ensuring the growth of the onshore shale industry for years to come. The decrease reflects many factors including softer demand from refineries and concerns about the US-China trade war’s impact on global economic demand. The US oil benchmark is currently hovering near $63 per barrel. Cost reductions and increasing production should stop crude oil prices from rising to high.

On April 3 2019, Ohio Governor Mike DeWine signed a bill which will increase the gasoline and diesel fuel taxes for the state.  Starting on July 1^st the state tax on diesel fuel will increase by 19 cents to a total of 47 cents per gallon.  The 67% increase will bump Ohio to the 6^th highest diesel fuel tax rate behind only California, Pennsylvania, Washington, Indiana, and New Jersey.  The tax on gasoline will be increased by 10.5 cents per gallon to a total of 38.5 cents per gallon.  Ohio’s gasoline tax will remain lower than Pennsylvania and Indiana, but will be higher than its neighboring states, Kentucky, West Virginia and Michigan.

Earlier this week, California senator Nancy Skinner proposed a daring bill that targets air quality and limiting greenhouse gas emissions.  The bill would oblige the California Air Resources Board to, “require a 40 percent reduction in diesel emissions by 2030 and an 80 percent reduction by 2050.”  This is not the state’s first proposed bill to cut emissions, but certainly has garnered attention due to the huge impact this would have on the transportation industry in California.