Fuel Supply Update From Eric Osterhaus, VP of Energy
Jul 28, 2022
I would like to take this opportunity to provide our customers with some fuel supply information received this week from CHS Inc.
I’m sure many of you have heard and read about a possible fuel shortage coming later this year, and I had informed many of you about a month ago that we were not hearing or seeing any of that type of information confirmed. This week, CHS informed us that part of a pipeline that feeds into the Kansas City and Topeka terminals was disrupted in Oklahoma over the last few weeks. It is now fixed, however, product was not able to be pushed through the pipeline while the repairs were made. Now that product is flowing again, it will take the next 3-6 weeks to get supply levels built back up at the terminals. The Topeka terminal is what they consider to be a tertiary terminal, meaning that it will get filled with product later than say, Kansas City, will. Kansas City is a much more prominent terminal and will be taken care of first.
Coupled with this information is an already depleted fuel supply here in the Midwest. In addition, there is the possibility of the Midwest region being dry in general, meaning harvest could start at the same time for a very wide area. This could put a higher demand on tight fuel supplies and potentially lead to more supply disruptions during this harvest season.
With all of this information, it may be wise to consider filling your tanks now, and keeping them filled, so that you will have product to get through harvest.
Another piece of information that I will share is that since the first of the year, we have experienced about 3-4 cycles of a runup on fuel prices, followed by a very quick drop in prices. The runups usually go for about 4-6 weeks at a time, and then the drops usually occur in about a two-week window. We have experienced a good drop on fuel prices over the last few weeks, and as of today, July 28, 2022, we have now had three straight days of positive prices. It gives me the feeling that we could be poised for another runup on fuel prices over the next few weeks.
There's one last supply issue I will relay to you: we have been asked by many people about a possible upcoming shortage of DEF. I have spoken with two different suppliers, and they have assured me that this is a false narrative going around. Apparently, there was an article written by a journalist a few months ago when there was a possibility of the government charging an embargo tax on the railroad for transporting DEF in the northern states. That never came to fruition. Our suppliers have informed me that Urea prices have been coming down over the last few months, which tells them that they have ample supply to work with and that none of their manufacturing plants are reporting supply issues. We have not had any issues getting DEF supply to this date.
Please feel free to reach out to me if you have any questions or concerns. Thank you all again for your continued business! We really do appreciate your support!
Eric Osterhaus
Ag Partners VP of Energy
I’m sure many of you have heard and read about a possible fuel shortage coming later this year, and I had informed many of you about a month ago that we were not hearing or seeing any of that type of information confirmed. This week, CHS informed us that part of a pipeline that feeds into the Kansas City and Topeka terminals was disrupted in Oklahoma over the last few weeks. It is now fixed, however, product was not able to be pushed through the pipeline while the repairs were made. Now that product is flowing again, it will take the next 3-6 weeks to get supply levels built back up at the terminals. The Topeka terminal is what they consider to be a tertiary terminal, meaning that it will get filled with product later than say, Kansas City, will. Kansas City is a much more prominent terminal and will be taken care of first.
Coupled with this information is an already depleted fuel supply here in the Midwest. In addition, there is the possibility of the Midwest region being dry in general, meaning harvest could start at the same time for a very wide area. This could put a higher demand on tight fuel supplies and potentially lead to more supply disruptions during this harvest season.
With all of this information, it may be wise to consider filling your tanks now, and keeping them filled, so that you will have product to get through harvest.
Another piece of information that I will share is that since the first of the year, we have experienced about 3-4 cycles of a runup on fuel prices, followed by a very quick drop in prices. The runups usually go for about 4-6 weeks at a time, and then the drops usually occur in about a two-week window. We have experienced a good drop on fuel prices over the last few weeks, and as of today, July 28, 2022, we have now had three straight days of positive prices. It gives me the feeling that we could be poised for another runup on fuel prices over the next few weeks.
There's one last supply issue I will relay to you: we have been asked by many people about a possible upcoming shortage of DEF. I have spoken with two different suppliers, and they have assured me that this is a false narrative going around. Apparently, there was an article written by a journalist a few months ago when there was a possibility of the government charging an embargo tax on the railroad for transporting DEF in the northern states. That never came to fruition. Our suppliers have informed me that Urea prices have been coming down over the last few months, which tells them that they have ample supply to work with and that none of their manufacturing plants are reporting supply issues. We have not had any issues getting DEF supply to this date.
Please feel free to reach out to me if you have any questions or concerns. Thank you all again for your continued business! We really do appreciate your support!
Eric Osterhaus
Ag Partners VP of Energy