WINNIPEG (CNS) – The short-term outlook for the diesel market in North America calls for current prices to remain largely untouched through spring planting, however it could change drastically after that.
According to Tom Kloza of the Oil Price Information Service in New Jersey, prices for diesel could even get higher than crude oil. “It could evoke memories of 2007, 2008 when diesel prices really got out of hand.”
He explains the catalyst for change lies in looming changes to the shipping industry.
“There will be a lot more diesel used to fuel ships around the world. Something on the order of four million barrels per day of additional diesel demand worldwide,” he said.
Read Also
Farm cash receipts rise in first half of 2025 on livestock gains
Farm cash receipts in the first half of the year were up 3.3 per cent over the same period last year buoyed by livestock receipts. Overall receipts between January and June totalled $49.6 billion, up $1.6 billion from the same period last year, Statistics Canada reported.
Currently, large freighters and transports are allowed to use thick, sulfur-laden fuel on voyages. However, they will soon have to change to cleaner-burning fuel in a bid to become more environmentally friendly.
“A single container vessel (currently) emits more sulfur in its lifetime than 10 to 15 million diesel cars,” said Kloza.
Kloza says the switch will be a big one as the ships move from fuel that contains 35,000 parts per million (sulfur) to something much lower, perhaps as light as 5,000 parts per million.
He says that means diesel will likely be in booming demand by the latter part of 2019.
“So enjoy it while you can,” said Kloza, adding diesel could be in shorter supply by at little as nine months from now.
However, he does say there are some factors that could help mitigate the cost of diesel. For one, some countries like Iran don’t want the cost of oil to rise too much for fear American shale oil drillers will move in and take their market share.
As well, more oil production is coming on line throughout the world.
“There’s no question we’ll see more crude oil coming from the U.S., just vast amounts,” he said, adding Canada probably has another 300,000 to 400,000 barrels of crude oil also set to begin flowing by next year.
As of the morning of March 13, prices for diesel on the Prairies ranged from the 99 cent per litre mark to C$1.05.
But, if Kloza is correct, those prices will be a fleeting memory by this time next year.
“For spring planting this year I think the price of diesel will be pretty moderate because crude oil prices will be moderate,” he said. “But boy, a year from now it really changes and it will change dramatically.”
