Hurricane Harvey’s destruction of a large chunk of Houston’s fossil fuel refining capacity has resulted in US diesel exports diminishing somewhat in recent weeks. As a result, and owing to strong demand on the international market, European diesel exports are now at an all-time high.
To be more specific, Europe is now slated to export a record volume of diesel in September, filling in for US firms taken out of action by the hurricane that flooded much of coastal Texas.
This situation summarizes exactly why I’ve always been more than a bit skeptical of those who want to place the blame for oil industry indifference to anthropogenic climate change at the feet of celebrity execs like the Koch brothers.
Even if such people were to be put in prison and their companies dismantled (for whatever reasons), profit seekers elsewhere in the world would be happy to step up to the table and take their place. The modern cultural and political systems of the world being what they are, it seems that there’s always someone looking to make a quick buck and happy to exploit what had hitherto remained unexploited.
So, if the oil industry of the US was to be dismantled in some way (as many activists are calling for), wouldn’t it simply be the case that firms in other countries would take up the slack? The demand would still be there, would it not?
It seems, in other words (at least to me), that the only real way of reducing greenhouse gas emissions to any significant degree is to do so from the demand side of things. But (and this is the real kicker) reducing demand for diesel from the demand side of things means consuming far less … of essentially everything.
It means not buying things shipped from the other side of the world, or things created from materials shipped from the other side of the world, or even “just” from across a continent. And how many people are going to agree to that?
Reuters provides more information on the situation, as concerning European diesel exports: “Europe is set to export a record volume of diesel in September as Latin American buyers struggle to recover from a drop in U.S. supplies in the wake of Hurricane Harvey, according to shipping data and traders.
“Europe regularly imports large volumes of the road fuel as the region’s refineries are unable to meet demand. It is set to import over 2 million tonnes of diesel this month, but severe disruptions caused by Hurricane Harvey on refining operations in the Gulf Coast have led to a temporary redrawing of traditional trade routes.
“At least 600,000 tonnes of diesel and heating oil are expected to sail from Europe and the Mediterranean to Brazil and Argentina in September, according to shipping data and traders.”
In other words, even though Europe doesn’t technically “have” the diesel to sell, it is still doing so because of the opportunity to make a quick buck.
“It’s a bit of a perfect storm with Latin American refineries still struggling, especially in Mexico and Venezuela, and as US product exports remain constrained,” explained Andrew Wilson, the head of energy research at BRS Brokers.
The Reuters coverage continues: “A handful of cargoes are regularly shipped from Europe to Latin America every month, September’s figures are nearly three times the highest average levels seen in recent history, according to traders. Traders expect the European exports to continue for several more weeks.
“’Harvey is causing all this. It made US Gulf Coast exports very expensive and Europe is proving to be cheaper,’ a trader said. Harvey knocked out about 4.4 million barrels per day (bpd) of refining capacity in the Gulf Coast, roughly a quarter of total US capacity. Over 1 million bpd of crude distillation capacity remained offline this week.
“Gulf Coast exports have gradually resumed in recent weeks, with several diesel cargoes booked to go to Latin America, according to shipping data. But traders expect the European exports to continue for several more weeks. Brazil and Argentina are highly dependent on fuel imports due to a lack of domestic refinery capacity caused by years of under investment.”
As a result of these exports, Europe’s diesel stocks will fall by around 2 million tonnes in September, according to the traders referenced above. Quite a drop, no? I wonder what would happen if multiple disasters like Hurricane Harvey were to happen all at once, taking refining capacity offline to an even greater degree? I suppose that we may well find out at some point in the next couple of decades, whenever the next round of large wars kicks off.
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