Diesel supplies prompt Nebraska HOS waiver

| Thursday, July 27, 2006

A scorching heat wave and the switch to ultra-low sulfur diesel are being blamed for tight diesel supplies in some areas of the Midwest, including Nebraska and Iowa.

Supplies are tight enough in Nebraska that Gov. Dave Heineman issued an order temporarily suspending hours-of-service requirements for diesel haulers in that state. The waiver went into effect July 21 and expires on Aug. 20.

ProMiles reported a national average price for diesel on July 27 of $2.987 per gallon. By contrast, Nebraska was up to $3.318 per gallon.

Larry Pearce, a spokesman for Gov. Heineman’s office, told “Land Line Now” on XM Satellite Radio that extraordinary heat in the state has caused an increased demand for diesel among farmers who have to irrigate their crops more than usual.

Pearce also said that one of the major refineries in the area was later than usual in doing its scheduled maintenance, which also contributed to the problems.

Doug McIntire, a spokesman for the Energy Information Administration, told Land Line that he hadn’t heard of any widespread supply problems in the Midwest, but statistics on the EIA Web site did show that diesel production in the region on July 21 was down 17 percent from the previous week.

The Independent, a Grand Island, NE, newspaper, reported that other states including Kansas, Iowa and Missouri, were experiencing tight supplies.

A spokeswoman for the Iowa Petroleum Marketers Association told “Land Line Now” that there are some shortages in western Iowa, but she added that is typical for this time of year as refiners begin to switch away from summer diesel.

However, this year in particular, the switch to ultra-low sulfur diesel could be complicating matters.

Tim Keigher, executive director of the Nebraska Petroleum Marketers Association, told The Independent that the switch to ULSD is at least partly responsible for the problems in that state.

Marvin Spees, president of Capitol City Oil in Topeka, KS, told “Land Line Now” that, while he wasn’t seeing any shortages in Kansas at the moment, the ULSD switchover means the potential for supply disruptions is there.

“I think things are going to get worse before they get better as everybody tries to get the lines flushed out and the tanks flushed out in anticipation of ULSD regulations that come in October,” he said.

Spees said rural areas are likely to feel the pinch the most as oil suppliers will try to supply heavily populated metro areas first.

None of the major diesel retailers were reporting big problems on the fuel price reports on their Web sites. Flying J did report low supplies at one location in North Platte, NE, on July 27.

However, Pearce said the governor’s office had heard reports that several stations had taken it on their own to start rationing how much fuel they were selling to keep from running out.

– By Terry Scruton, senior writer
terry_scruton@landlinemag.com

Staff Writer Reed Black contributed to this report.

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