Last week signaled the end of 2017 as WTI crude oil and diesel fuel prices reached yearly highs. Platooning moved to the forefront of the transportation technology conversation as ten states across the country confirmed allowance on roadways after the completion of a 1,000 mile test. Pipelines were a prominent part of the conversation as a spill in Libya contributed to fluctuation diesel prices, while the Dakota Access pipeline starts to pay off for North Dakota. Further, Texas shale fields will be connected to Gulf Coast export hubs with new pipeline construction.
2017 Closes with Annual Highs in Crude Oil & Diesel Prices
For the second consecutive year, the price of WTI crude oil and wholesale diesel closed the year at annual highs. Whereas 2016’s strength was highlighted by anticipation of OPEC’s production cuts – and no real changes in supply-demand fundamentals – 2017’s pricing highs were brought about by declining levels of global oil and refined product inventories as well as disruptions at both the domestic and international level. For diesel, 2018 will begin with prices that haven’t been seen since December 2014, when the market was a month removed from the start of the precipitous fall in global crude oil prices.
WTI crude oil – the US oil benchmark – finished 2017 by breaking $60/barrel. The most recent surge came from an unexpected global disruption from an oil pipeline explosion in Libya last week. The event disrupted nearly 100,000 barrels per day of oil supply, causing a small spike in oil prices around the world. The line was repaired within the week to limit the long term impact of this disruption, but the incident serves as a reminder that unexpected events can cause significant impacts to energy prices. While $60/barrel is a significant milestone, it is not far removed from $45-55/barrel that WTI prices moved within for much of 2017.
Diesel prices surged above 270¢/gallon to close the year, aided by incremental price increases from severe cold weather across the US. Diesel’s price impact from the cold weather outweighed other petroleum products, as increased use of heating oil – which is chemically identical to diesel – causes an influx in demand for the fuel (most notably in the Northeast). The premium to market diesel prices is a fitting end to 2017, as diesel prices have been elevated above other refined products since the disruptions of Hurricane Harvey in late August. An example of diesel’s elevated price: the last time WTI crude oil was around $60/barrel, the US diesel wholesale average was 250¢/gallon (20¢ below its current mark).
Peloton’s Platooning Tech Completes 1,000-mile Test
Peloton Technology rolls into the new year with hopes of commercializing their platooning technology in 2018. The company continued to move closer to that goal as they announced a successful test of over 1,000 miles in Florida. Steve Boyd, Peloton co-founder and VP of External Affairs, announced that the two-truck platoon test was a success for both vehicle efficiency and safety. The company hopes that Florida will join nine other states across the US that have already confirmed allowance of commercialized platooning on their roadways. Peloton also successfully tested equipment in Michigan in early December.
In Other News
Crude oil traded at its highest level since mid-2015, supported by an explosion on a crude pipeline in Libya and voluntary OPEC-led supply cuts.
November’s Class 8 truck orders, which hit about 32,900 units according to ACT Research, boosted backlogs by 10,100 units to 115,200. Rising orders in recent months have generated more work for the industry, according to Kenny Vieth, ACT Research’s president and senior analyst.
Oil markets eased off a 2½-year high Wednesday after a pipeline blast in Libya disrupted supplies and caused a price spike.
The repair of a Libyan crude oil pipeline, blown up on Tuesday, will take about one week, the head of Libyan state oil firm NOC told Reuters on Wednesday.
The Dakota Access Pipeline marks six months of operations on New Year’s Day, and new data show that North Dakota is already enjoying major benefits from the $3.8 billion project. The pipeline has significantly lowered energy transportation costs and energy companies to move their oil to the Gulf Coast, where it fetches a higher price. So it’s little surprise that energy production has surged since the Dakota Access Pipeline opened.
Several oil pipeline companies this month agreed to move ahead on multi-billion-dollar projects that would link Texas shale fields to Gulf Coast export hubs, offering new outlets for burgeoning output expected in 2018.
Through the first nine months of 2017, U.S. biodiesel production levels were slightly higher than 2016 levels, despite the expiration of a federal biodiesel blender’s tax credit at the end of 2016, according to an analysis by the U.S. Energy Information Administration (EIA).
Peloton Technology logged more than 1,000 miles in two Peloton-equipped Volvo VNL670 Class 8 trucks during the State of Florida’s Driver-Assistive Truck Platooning Pilot Project on the Florida Turnpike… The two trucks traveled at a separation distance of approximately 65 feet, with professional drivers remaining fully in command of each truck at all times.