Traded Diesel for Gas

We have shot ourselves in the foot. Normally this time of year, at least a month ago already, refineries would have retooled to make more diesel and heating oil and less gasoline.

President Bush asked all refineries to continue to make more gas than diesel until further notice. The result? H2's can now be filled for under $100 but goods and services will cost more. Since everything you own arrives via diesel (except the trip home from the store, which is typically gasoline), the high energy prices are finally going to take their toll on the economy.

We have effectively replaced a looming gasoline shortage with an actual diesel shortage. The effects of this are far more painful than the gasoline problem, simply because the end consumer has no control over diesel consumption of the truck/ train/ tractor that was involved in their final purchase of a tomato.

For the record, today's diesel price is $3.226 a gallon. A new record. And just a reminder, Gulf of Mexico crude production is only 35% of normal as of yesterday. It hasn't been anywhere close to 100% since August 28, just before Katrina came barreling through.

I for one believe we need to immediately shut down all the refineries for the seasonal cutover. If not, this winter, diesel will be scary and the dollar won't buy a tomato.

Nate