Western Railroad Discussion > diesel fuel shortage this summer?

Been reading in the news about diesel fuel shortages coming this summer.  Will this affect the railroads or do they hedge their fuel in such a way they are insulated?  From what I have read the shortage appears to be involving capacity on the east coast.  Is infrastructure (cars, terminals, etc) in place for railroads to move fuel east?  Can the railroads handle any more business?


 

Todd Clark
Canyon Country, CA
Trainorders.com

I can't speak for the east coast RR's but I doubt either western RR can handle much more trains at this point, specifically the big orange one. They have been hemroging crews and hiring classes are not helping much. Example my terminal they have started 2 classes this year. One of 16 the other 12. First class is down to 8 or 9 and second is already down 4 in two weeks. That doesn't even come close to the nearly 60 that have walked away in the past few months. 

Managers have tried for years and now they've succeeded!  They've made the job so bad that no one wants to do it.  Nice job!  Same thing is going in in the airline industry.  Nice work, Harvard Business School!!

Todd; the Class 1’s do hedge their fuel purchases. I would imagine up till a few months ago the primary intent of hedging was to ensure a better price but, given the current environment, assured supply has probably become the focus.

CW

Posted from iPhone

Pacific5th Wrote:
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> I can't speak for the east coast RR's but I doubt
> either western RR can handle much more trains at
> this point, specifically the big orange one. They
> have been hemroging crews and hiring classes are
> not helping much. Example my terminal they have
> started 2 classes this year. One of 16 the other
> 12. First class is down to 8 or 9 and second is
> already down 4 in two weeks. That doesn't even
> come close to the nearly 60 that have walked away
> in the past few months. 


A certain black and white RR can't handle anymore business either. Trains dying on HOS, terminals can't handle them, etc. We "tie one down" and if there is still time, we take another one that was tied down. Dispatch moves one stopped train to make room for another.....precision at its finest??!!??!!

All the while, people continue to walk away......

Posted from Android

https://www.freightwaves.com/news/why-the-northeast-is-quietly-running-out-of-diesel

66

Hi-Viz version 2.0 is just lipstick on a pig.

webmaster Wrote:
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> Been reading in the news about diesel fuel
> shortages coming this summer.  Will this affect
> the railroads or do they hedge their fuel in such
> a way they are insulated?  From what I have read
> the shortage appears to be involving capacity on
> the east coast.  Is infrastructure (cars,
> terminals, etc) in place for railroads to move
> fuel east?  Can the railroads handle any more
> business?

It's going to be bad.  Apparently there are a few factors which will make the supply of diesel even worse than for other petroleum products. I wonder if some railroads will be looking for areas which they can use LNG like the FEC is doing.

Juniata Wrote:
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> Todd; the Class 1’s do hedge their fuel
> purchases. I would imagine up till a few months
> ago the primary intent of hedging was to ensure a
> better price but, given the current environment,
> assured supply has probably become the focus.
>
> CW
>
> Posted from iPhone

Hedging works with price increeases but not with supply. We have not built a new oil refinery in this country in many years and just in time pipeline deliveries to terminals is getting worse. Since the environmental rules have segregated diesel into on road. off road and loco/generator grades shortages will become a normal part of the supply chain. When DEF starts to get short which it will you will see more tractors parked so less trucks on the road and less locomotives out there that use this additive. I was in the retail/wholesale oil business most of my life in fact I'm a third generation oil man and I am glad I am retired and out of it. If you want to really see fear in people's eyes's tell them there is no fuel to run their trucks, car or heat their home. I saw that in the 70's and 80's and I can tell you it's not a good feeling . ---  Ken 

Yup those 70's era gas lines would bring out some wide eyed people!

Out

Odd or even?

callum_out Wrote:
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> Yup those 70's era gas lines would bring out some wide eyed people!

Showing people in those 70's era gas lines the $5 + prices we see on the pump today would be a shock to their system.
I still remember the upheaval when gas stations crossed the $1 per gallon gas price and had to update gas pumps.
(Some stations switched to liters - which didn't last - others put a "$1" decal on front of the price until the machinery was replaced.)
The next shift was when gas prices passed $2 per gallon - but by then people realized we were not going back to prices under $1.

Supply is more important than price ... if there is no diesel or no gas to buy then it doesn't matter if it is 80 cents or $80 per gallon.

 

One benefit of some hedging fuel plans is you can move to the head of the line when supply is constricted.

Many industrial plans agree to pay a specified cost plus a margin. If somebody else is buying on the spot market they may not find any willing sellers.

Posted from Android

True. If I contract to buy 5 million gallons at $2.00 per gallon the suppliier has to fulfill the contract. They can't break the contract simply because another buyer is willing to pay $2.50 or $3.00 for those gallons. If the price drops to $1.50 per gallon I would still be obligated to pay $2.00 (unless there was some contract provision that served both of our interests.

With the stock market crashing, war in Europe and run away inflation, it will indeed be a
very long, hot, and crazy summer...
(And I didn't even mention the Covid surge.)

bert14 Wrote:
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> With the stock market crashing, war in Europe and
> run away inflation, it will indeed be a
> very long, hot, and crazy summer...
> (And I didn't even mention the Covid surge.)

Lots of good companies with reliable earnings are on sale right now.

Posted from Android