Supply chains and the energy that fuels them
America's disturbing supply chain problems aren't near to being fixed. On the news we hear of store shelves not having baby formula.
At the center of such breakdowns is trucking. Everything but everything is transported to stores by trucks — semi-trucks. Semi-trucks run on diesel, not petrol (gasoline), and the price of diesel is much higher than the price of petrol. Some truckers are reportedly at the point where they may have to shut down due to the price of diesel. On May 7 at LewRockwell, James Howard Kunstler wrote:
The $6.49 price on a gallon of diesel is enough alone to tell you that the nation can't do business the way it's set up to do, and there isn't a new model for running things ready to launch — not even Klaus Schwab's utopia of robots and eunuchs. ...
US-inspired sanctions on Russia have quickly blown-up in America's face. How's that ban on Russian oil working? Do you understand that US shale oil — the bulk of our production — is exceptionally light in composition, meaning it contains not much of the heavier distillates like diesel and aviation fuel? 'Tis so, alas. Truckers just won't truck at $6.49-a-gallon, and before long they'll be out of business altogether, especially the independents who have whopping mortgages on their rigs that won't be paid. The equation is tearfully simple: no trucks = no US economy.
It is apodictic that the price of diesel is incorporated into the price of everything transported by diesel. And again, everything is transported by diesel. Kunstler's reference to "U.S. shale oil" is on point, because it is shale oil from fracking that turned the U.S. oil business around in the decade from 2008 to 2018 and enabled America to become energy independent. Without shale oil, America would not have enjoyed her brief moment of energy independence, which Joe Biden destroyed with his monumentally stupid and vindictive energy policies.
But, as Kunstler noted, shale oil doesn't contain as much of the distillates that can be made into diesel as do other types of crude oil — what the industry calls "conventional oil."
So what are we gonna do about our little diesel dilemma? The answer should involve those products that compete for the same distillates. According to a chart that breaks down the different products from a barrel of crude oil, it appears that heating oil uses the same distillates as diesel. If we're to get baby formula to America's stores, perhaps the government should mandate (and the current regime is always ready for another mandate) that folks who heat their houses with heating oil must switch to something else.
Short of that, is it too early in what may turn into a galloping crisis to think about rationing diesel? A rational rationing system for diesel would give priority to truckers who are transporting essentials, like baby formula. Truckers transporting baby toys would go to the back of the line when fueling up.
Meanwhile the supermarket shelves grew bare as the jobbers quit their resupply deliveries ... state government affected to distribute food, but diesel fuel was in short supply, too, and the few trucks sent out were easily hijacked.
Even if one rejects Kunstler's central premise, these books are terrific reads, quite pleasurable, and I highly recommend them.
Back on April 4 in these very pages, I mydamnself warned about the price of diesel. Since then, the price has only risen. It should be obvious now to all fair-minded Americans that the weakest link in the supply chain is our senile, sclerotic central government.
Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.