The structural shift in the U.S. refined products markets throughout this decade—with the U.S. becoming a net exporter—has benefited consumers, the country’s manufacturing sector, and the trade balance.
Despite the behavior that led to the 2015 VW scandal and its continued fallout, diesel remains an efficient fuel that can reduce total petroleum consumption, and is still a viable part of a larger strategy to reduce oil dependence.
For every diesel truck replaced with natural gas, Waste Management cuts consumption of diesel by an average of 8,000 gallons per year.
Market conditions had been mostly kind to U.S. refiners over the past five years, but current oversupply of refined products, excess downstream capacity, and tight spreads between the two major benchmarks have considerably changed the outlook.
Although new regulations will improve efficiency and curb pollutants, the electrification of the vessels on the water and the growth of autonomy in shipping, similar to changes in the auto industry, can bring about widespread benefits.
The global oil markets have been dealing with a crude supply glut for sometime, but now the surplus has shifted to refined products. With high stocks of diesel and gasoline worldwide, oil prices, now trading in the mid-$40s, could move lower.
The diesel market is dealing with two major issues, one of which is a short-term glut and the other which surrounds questions about its long-term outlook in the wake of Volkswagen cheating on emissions testing.
As Indonesia prepares to be readmitted into OPEC at the upcoming December meeting in Vienna, it faces complex energy policy decisions, particularly in regards to fuel subsidies.
What long-term impact the scandal will have on Volkswagen sales is still difficult to say, but there is good reason to believe that European automakers will shift their emphasis to hybrids and plug-ins.
While news coverage has focused on other aspects of bilaterial talks, China and the U.S. are now among the few countries regulating fuel economy standards for heavy duty trucks.