have seen relative diesel price stability in 2002, but that may
soon change. Geopolitical factors, EPA regulations, and new trading
dynamics may all conspire to push diesel fuel prices back into
the turmoil that marked the first two years of the 21st century.
will be addressed at the 8th Annual Oil Price Information Service
(OPIS) Fleet Fueling meeting and tradeshow at the MGM Grand in
Las Vegas Aug. 18-20.
to OPIS data, scarcely 12 cents per gallon has separated low and
high diesel prices so far in 2002, and that's down from the wild
53-cent difference witnessed in 2001 and the 40-cent gallon range
seen in 2000. But industry experts envision instability in the
next nine months.
can easily make a case for a 20 cent-per-gallon surge or fall
in fuel prices," said Tom Kloza, OPIS' chief oil analyst.
"In fact, you can see elements conspiring to push some regional
markets sharply higher, even as world prices fall."
groups are again warning that new government mandates for low
sulfur fuel specifications could create diesel price havoc. Similar
predictions were made during the last decade only to see suppliers
quickly adapt to new regulations, ultimately leading to accusations
that industry had "cried wolf."
time, the "wolf may be at the door." For example, refinery
consolidation had a different meaning in 2000-01 as medium-sized
companies wanted to get bigger and big suppliers wanted to gain
critical mass. Now, cost cutting is king and more than a dozen
refineries face sale or closure by year's end because of slumping
margins and high de-sulfurization expenses, OPIS says.
refiners won't be required to make the lower sulfur diesel until
2006, but the high cost of sweetening the spec for gasoline production,
fending off foreign imports, and beginning the construction process
for multimillion diesel desulfurization units could tighten supplies
in some regions as early as this winter.
supply challenge, meanwhile, is offset by perhaps the most uncertain
international picture since the Persian Gulf war. A weak dollar,
lack of OPEC discipline, Venezuelan unrest, and drastic gyrations
in global economies could all conspire to create unprecedented
updrafts and downdrafts for world oil markets.
between costs seen for purchases at the top or bottom of the market
in 2000 and 2001 varied by more than 60 percent. Experts at next
month's conference will detail why similar volatile diesel price
swings may be ahead for the United States. For more information
about the conference and show, visit www.opisnet.com/market/conferences/fleetweb/index.htm.