Arctic Vortex Spins Diesel Prices Upwards

January 9, 2014

The recent Arctic Vortex caused truckers and long-haul tractor-trailer operators plenty of trouble. In some parts of the country, blizzard conditions turned roadways into snow-bound parking lots. In other areas, freezing rain made highways dangerously slippery. And no matter where you drove the cold was penetrating and relentless. As the mercury plunged below zero across the Midwest and brisk winds pushed temperatures 20 and 30 degrees (Fahrenheit) below zero, one weatherman commented that it was warmer in Fairbanks, Alaska than it was in Central Ohio!

Thankfully, the Arctic blast only lasted a couple of days; but the lingering effects of the record-breaking cold have had an unexpected negative impact on America's trucking industry. From North Dakota to Texas, severe weather shut down or slowed oil production, forcing the price of on-highway diesel fuel to rise by seven-tenths of a cent. On January 6, the Energy Information Administration of the U.S. Department of Energy reported an increase in diesel prices to $3.910 per gallon compared to $3.903 per gallon the previous week.

Sub-zero temperatures in the northern Alberta oil sands have already pushed the cost of Canadian heavy crude to five-month highs. While Arctic temperatures are rarer in the U.S., North Dakota is known for its brutal winter weather with frequent heavy snows and below zero wind chills. Even so, the Arctic vortex visited particularly vicious, life-threatening wind chills dropping to 60 degrees below zero on the Dakota oil sands. January's icy weather further slowed oil production already slowed by freezing temperatures in Texas and minus 40-degree cold in North Dakota at the end of December.

Winter storms pose two threats to oil production. Deep snow can close feeder roads and prevent access to well sites, but cold presents an even more serious problem, Reuters explained. When temperatures drop between minus 40 and minus 60 degrees F., Bakken crude freezes, turning from a liquid into a plastic-like substance that can't flow through pipes. We can all hope that the winter doesn't have any more brutal temperatures in store and that diesel prices start edging down again as temperatures return to normal.

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