Scrambling for diesel as Midwest pipeline shuts before harvest
With the fall harvest looming, pockets of the U.S. Midwest are bracing for a mad scramble for diesel fuel to power tractors and combines after the summer closure of a key pipeline that supplied buyers from Arkansas to Indiana.
After losing a months-long battle to prevent Enterprise Products Partners from shutting down its TE Products diesel and jet fuel line, which pumped its last barrel in July, local fuel distributors say they are seeing signs of the higher costs and longer drives they have feared were coming.
Aaron Littlefield, president of fuel supplier and transporter Littlefield Oil Co in Fort Smith, Arkansas, said that several of his drivers this month have been forced to make as many as three stops at diesel fuel terminals to fill up their tanks. Before, just a single trip to the Enterprise-supplied tank farm just north of the state capital of Little Rock had sufficed.
"It looks like the trouble is starting," he said.
Jet fuel providers have it even worse, he says. One was forced to travel as far as Tyler, Texas, 260 miles (418 km) southwest of Little Rock. Arkansas has only one small refinery in the far south, and it doesn't make jet fuel.
The shutdown illustrates how the nation's energy map is being redrawn amid the U.S. shale boom. Enterprise is repurposing its line to move cheap ethane from Pennsylvania's Marcellus gas fields to feed growing petrochemical plants in Texas. The company, which makes money based on the volumes it moves, saw more profits in that growing ethane market than in declining distillate volumes moving south to north.
The emerging shortages of distillate fuels in a landscape that is otherwise awash in energy has Midwest traders, suppliers and marketers racing to adapt.
Suppliers drive further to wait longer at fewer stocked terminals instead of relying on a pipeline that delivered fuel for years. Many anticipate pockets of higher prices at truck stops and gas stations in the region as higher freight costs to move fuel trickles down to the pump.
Moving fuel by truck can cost up to seven times more than moving it by pipeline, experts estimate.
Matt Schrimpf, president of Piasa Motor Fuels in Hartford, Illinois, his family's business of more than 80 years, said his staff has coached customers, encouraging them to plan ahead.
Many are farmers who may not understand that his trucks will have to drive twice as far to pick up another load.
"When these farm accounts call, they're used to saying 'Hey, I'm in the field, I forgot to call ahead and I need something now,'" he said. "Well, 'now' might be tomorrow."
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