There is a lot of talking going around about diesel shortages in Minnesota. On Monday, Oct. 6, the Star Tribune published “Dayton eases rules for diesel fuel.” While the article does a good job of bringing to light a fuel situation that is cyclical in Minnesota, it did little to expand on what is causing these “shortages.”
In all truthfulness, there have been no diesel shortages in the Twin Cities, which represents about 70 percent of the diesel market in Minnesota. There have been spot shortages in Alexandria, Fargo, Grand Forks and Mankato.
The shortages at out-state terminals have caused long lines at Twin Cities terminals as out-state fuel distributors come to the Twins Cities to get diesel. This situation is nothing new for this time of year AND has nothing to do with biodiesel. It has happened this way every year for at least the last 10 years.
Some additional factors to also take into consideration – the wheat harvest usually takes place from the end of July to the beginning of August. This year, wheat harvest was delayed and occurred from late August to early September. On top of that, the sugar beet harvest is in full swing and ahead of schedule and the corn and soybean harvesting seasons are just getting underway so diesel demand has spiked in this overlap of harvest needs.
Another factor involved in the spot shortages is the price of diesel, which has been dropping for at least a month. When the price is continually decreasing, people/companies delay their fuel purchase until they absolutely need to buy it. With the continued falling price, no one was buying fuel to store in advance. In shortages, prices increase dramatically like we experienced in propane last winter and gasoline in May 2013.
Lastly, there is speculation from some groups that some diesel users delayed their fuel purchases until the biodiesel mandate reverted to B5 on Oct. 1. While a few users may have done this, the amount of people delaying purchase of fuel until B5 was available would not add up to enough volume to cause fuel shortages. There are farmers that are also requesting B10 and B20 in October to avoid the diesel shortage in certain areas – which are likely offsetting those that waited for B5 to be reinstated.
All-in-all, the harvest season is a busy time of year for farmers and fuel suppliers. Demand for diesel fuel is high right now, as it has historically been for some time. Let’s hold out hope for continued good weather and low diesel prices because as we know, things can change quickly.
Lisa Pedderson is Director of Operations for MEG Corp., a fuel consulting based in Plymouth, Minn.