DIESEL REPORT: Fuel supplies tight; fuel rumors plentiful

| 8/16/2006

Aug. 16, 2006 - Chatter from the road Wednesday afternoon was that some fuel stations out West were out of diesel, specifically at a Flying J Truck Stop in Idaho. But Flying J officials said the chain is not out of diesel and other sources in the supply line said that supplies aren't any tighter than they were a week ago.

However, one OOIDA member reported that when he pulled into the Flying J in Caldwell, ID, on Tuesday, the fuel island was taped off. An employee at the truck stop confirmed for Land Line on Wednesday that the station had been temporarily out of fuel Tuesday, but had received a shipment Tuesday evening.

Chatter at the truck stop and in trucker-related Internet forums indicated fuel stops from Boise, ID, to Ontario, CA, were out of diesel, but Land Line could not confirm that information.

"It's not any worse than it was about a week ago," said Jack Sapp, operator of Sapp Bros. Big C on Interstate 80 in Cheyenne, WY. "We're still struggling to get fuel every day. I know some of our competitors were out (Tuesday), though."

Wednesday afternoon Sapp's No. 2 diesel was selling for $3.19 and his B20 biodiesel blend was going for $3.17 per gallon. According to ProMiles, the Wyoming average price Wednesday was $3.243, compared with $3.166 on Wednesday a week ago.

For Idaho, ProMiles was reporting an average of $3.462 on Wednesday, which was up 4 cents from the average of $3.423 on Tuesday. The national average, according to ProMiles, was $3.101 per gallon Wednesday.

The increasing prices and supply woes in Idaho, as well as areas west of Colorado and Wyoming, are probably the result of the ripple effect, said Bryant Gimlin, energy risk manager for Gray Oil Co. in Denver.

The ripples started flowing out from the Denver and Cheyenne areas in early August when several events combined to restrict diesel supplies. Gimlin and others in the industry pointed to the increased need for diesel to irrigate drought-stricken crops, unstable conditions in the Middle East and Nigeria and the switch to ultra-low sulfur diesel.

Gimlin said that it has probably taken this long for areas to the east and west of Denver to actually feel the supply disruption. However, he said he expects the situation to ease a bit because a refinery in McPherson, KS, is scheduled to start up production again this week after a temporary shutdown.

A wholesale operation, Gray Oil has been limiting its sales to regular customers only and those customers are only receiving their contracted amounts of fuel, regardless how much they want, Gimlin said.

In Colorado, ProMiles reported a gallon of diesel was averaging $3.347 on Wednesday.

- By Coral Beach, staff editor