Why the Northeast is quietly running out of diesel

Rachel Premack

The East Coast of the U.S. is reporting its lowest seasonal diesel inventory on record. And some trucking companies appear spooked.

The East Coast typically stores around 62 million barrels of diesel during the month of May, according to Department of Energy data. But as of last Friday, that region of the U.S. is reporting under 52 million barrels. 

The sharp increase of diesel prices has been a major stressor in America’s $800 billion trucking industry since the beginning of 2022. According to DOE figures, the price per gallon of diesel has reached record highs — a whopping $5.62 per gallon. It’s even higher on the East Coast at $5.90, up 63% from the beginning of this year. 

When relief is coming isn’t yet clear, and experts say higher prices are the only way to attract more diesel into the Northeast.

“I wish I had some good news for the Northeast, but it’s bedlam,” Tom Kloza, global head of energy analysis at OPIS, told FreightWaves.

Everyday Americans don’t fill up their cars with diesel, but the fuel powers our nation’s agriculture, industrial and transportation networks. More expensive diesel means the price of everything is liable to increase. Trucks, trains, barges and the like consumed about 122 million gallons of diesel per day in 2020. 

Patrick DeHaan, a vice president of communications at fuel price site GasBuddy, reported that retail truck stops are hauling fuel from the Great Lakes to the Northeast, calling it “extraordinary.” We’ve also seen anecdotal reports from truck drivers posting company memos:

Pilot Flying J and Love’s, two of America’s largest truck stops, told the Wall Street Journal yesterday that they were not planning to restrict diesel purchases, but were monitoring low diesel inventory.

Not unlike every other supply chain crunch we’ve seen in the past few years, the cause of the Northeast’s diesel shortage is multifaceted. A yearslong degradation of refineries is rubbing against the Gulf Coast preferring to ship its oil to Europe and Latin America.

Here’s a breakdown:

1. The East Coast has lost half of its refineries. 

As Bloomberg’s Javier Blas wrote on May 4 (emphasis ours): 

In the past 15 years, the number of refineries on the U.S. East Coast has halved to just seven. The closures have reduced the region’s oil processing capacity to just 818,000 barrels per day, down from 1.64 million barrels per day in 2009. Regional oil demand, however, is stronger.

Rory Johnston, a managing director at Toronto-based research firm Price Street and writer of the newsletter Commodity Context, told FreightWaves that refining is a “thankless industry,” with intense regulations that have limited the opening of new refineries. The Great Recession of 2008 led to several East Coast refineries shuttering, but there have been more recent shutdowns too. One major Philadelphia refinery shuttered in 2019 after a giant fire (and it already had declared bankruptcy), and another refinery in Newfoundland shut down in 2020.

2. It’s a financial risk to bring diesel to the Northeast.

The Northeast has increasingly relied on diesel from the Gulf region. Much of that diesel travels to the Northeast through the famous and much-adored Colonial Pipeline. You may remember the 5,500-mile pipeline from last year, when a ransomware attack shuttered it for nearly a week!  

It takes 18 days for oil to travel on the Colonial Pipeline from its source in Houston to New York City (or, more specifically, Linden, New Jersey), Kloza said.

That’s a long enough time to prioritize Colonial pipelines financially risky for traders — or, as Kloza said, “incredibly dangerous” — thanks to a concept called “backwardation.”

Backwardation refers to the market condition in which the spot price of a commodity like diesel is higher than its futures price. It’s only gotten stronger over time in the diesel market, Kloza said. So, a company could send off a shipment of diesel and find that it dropped by $1 per gallon in the time the diesel traveled from the Gulf Coast to New York — er, New Jersey. That could mean hundreds of thousands or more in lost profits, so traders often avoid such a fate.

“We’re not in an era where there are any U.S. refiners or big U.S. oil companies who would ‘take one for the team’ and bring cargo in where it’s needed,” Kloza said. 

The desperation is showing in New England and the mid-Atlantic regions. New England diesel retail prices are up 75% from the beginning of 2022, per DOE data. In the mid-Atlantic, diesel is up 67%. 

It’s not worth the risk, even amid ultra-high prices. As FreightWaves’ Kingston reported last week, the spread between a gallon of diesel in the Gulf Coast and its New York harbor price is usually a few cents. Last week, that swung up to 66 cents.

But that uptick still isn’t justifying moving oil to the Northeast — particularly when traders can make so much more money selling diesel abroad. 

3. Of course, we can blame COVID and the crisis in Ukraine. 

The catalyst for this diesel shortage, of course, is the ongoing conflict in Ukraine — particularly Europe’s desperation for diesel after weaning off Russian molecules. 

As CNBC reported in March, Europe is a net importer of diesel. Europe consumed some 6.8 million barrels of diesel each day in 2019; Russia exported some 600,000 barrels per day of that. Today, Europe has only eliminated one-third of its Russian diesel, so prices are expected to continue to climb amid that transition. Latin America, too, has been clammoring for U.S. diesel.

The Gulf Coast has been happy to provide such diesel, amid “insane” prices for diesel abroad, said Johnston. Waterborne exports of diesel from the U.S. Gulf Coast hit record highs last month, according to oil analytics firm Vortexa. (The records only date back to 2016.)

Naturally, COVID is also to blame for the Northeast’s run on diesel. Those refineries still retained on the East Coast scaled back during the pandemic due to staffing issues. It takes six months to a year to reignite refineries that were previously shuttered, Kloza said.

The ‘everything shortage’ endures

It’s been a tale as old as, well, last year. An industry is quietly hampered by supply issues for years, or even decades, and COVID pulls back the curtains on its unsteady foundation. It’s particularly jarring for commodities we never thought about before, like shipping containers or pallets, but that quietly underpinned our livelihood all along. 

Recall the Great Lumber Shortage of 2020? Big Lumber had unusually low stockpiles of wood by the summer of 2020, thanks to a vicious 2019 in the lumber industry shuttering sawmills and the spring of 2020 sparking staffing issues. (There was also a nasty beetle infestation.) Those in lumber expected the pandemic to slow the economy, not ignite online shopping, construction and housing mania. It meant lumber went from around $350 per thousand board feet pre-pandemic to a crushing $1,515 by the spring of 2021. The lumber price roller coaster persists today.  

In diesel, there’s no beetle infestation, but there are plenty of other headaches. It all means higher fuel prices on the East Coast, particularly the Northeast, to lure molecules from the Gulf Coast. And, down the line, probably more expensive stuff for you. 

Do you work in the trucking industry? Do you want to say that you hate or love MODES? Are you simply wanting to chitchat? Email the author at rpremack@freightwaves.com, and don’t forget to subscribe to MODES.

Renovation of Chamberlain Elementary School is nearing halfway point

Erica Drzewiecki

NEW BRITAIN – The $55 million renovation of Chamberlain Elementary School is nearing the halfway point and on schedule to be completed by December of this year.

New Britain Mayor Erin Stewart toured the property with the construction team Monday, including architect Kaestle Boos, construction manager Newfield Construction and members of the School Building Committee.

“I’m happy the project is on time and making great progress,” Mayor Stewart said. “We have great building partners in Newfield and Kaestle Boos and we’re grateful we were able to use the resources and money we get wisely. We’re looking forward to December’s completion.”

The same team completed the renovation of Smalley School a few years ago.

Chamberlain School was built in 1951 and an addition was made in 1996.

This project broke ground last spring after receiving a State School Construction Grant with a reimbursement rate of 95%.

A new 17,000 sq. ft. addition will increase the school’s footprint to 110,000 sq. ft. This wing will house administration offices and separate entrances for bus drop-offs and parent pick-ups.

It will ease traffic congestion around the school, located in a residential neighborhood off of Chapman Street, Sunrise Avenue and Newington Avenue.

The entire facility is being made ADA-compliant, with elevators, restrooms, doorways and other areas brought up to code for handicapped-accessibility.

There will be a dedicated wing and testing area for hearing-impaired students from across the Consolidated School District of New Britain (CSDNB).

“They will all be housed in the same building, which makes it more efficient for kids and staff,” Director of City Support Services Paul Salina explained.

There will also be separate playground areas for younger and older kids, as well as new athletic fields. A community health center is going to be another addition, alongside parent resource areas and community rooms.

It will be up to the New Britain Board of Education whether or not students return to Chamberlain mid-year or if they wait until the 2023–24 school year to reopen the school.

“We haven’t had any supply chain issues,” Newfield Construction Senior Project Manager Matt Glaser told the mayor.

“That’s good,” she said.

Salina walked through the classroom where he went to kindergarten, now all new construction.

“I’m happy to see this coming to fruition,” he said. “The good old east end deserves it.”

6 months in, Biden's infrastructure plan has 4,300 projects

JOSH BOAK

WASHINGTON (AP) — Six months after the signing of President Joe Biden's $1 trillion infrastructure package, the government said Monday there are 4,300 projects underway with more than $110 billion in funding announced — milestones the administration is publicly heralding as midterm politics intensify.

White House senior adviser Mitch Landrieu, the former mayor of New Orleans, said the roads, bridges and other projects are laying “a foundation for tremendous growth into the future.” Landrieu said Biden and members of his administration have made more than 125 trips to highlight the bipartisan investments in infrastructure. He declined to predict how much the storytelling will resonate with voters as construction starts.

“I think that if Americans step back, we will all have to admit that for the last 50 years we’ve had the need to do this and we haven’t found the will or the way to get it done,” Landrieu told reporters. He added that this is a “wonderful down payment” on infrastructure needs in the country that total roughly $7 trillion.

The administration made a strategic calculation that delivering results would help Democrats retain control of the House and the Senate in this year's elections. Infrastructure was a rare source of bipartisan unity as Biden struck a deal that attracted several Republican senators. The law contains money to expand internet access and replace lead water pipes and for rail and public transit projects and investments to address climate change.

When Biden signed the law on Nov. 15, he pledged to voters that “America is moving again and your life is going to change for the better.”

Six months later, the stock market is down, inflation is near a 40-year peak, Russia's war in Ukraine is pushing up energy costs and many Americans feel pessimistic about the economy's health. There is an open question whether voters will reward infrastructure projects in which the benefits are years away as part of what Biden has portrayed as an “infrastructure decade.”

“All we can do is tell the story about what we do, and the impact that it has on the midterms will be whatever it’s going to be,” Landrieu said.

Of the $110 billion announced so far, $52.5 billion is for federal highway funding this fiscal year and $20.5 billion for public transit. There is another $27 billion over five years for bridges, as well as money for safety, rural highways, airports, ports, drought resilience and other programs.

The infrastructure spending is also one area where political leaders will have to share credit with each other. Governors and mayors are responsible for 90% of the expenditures in the law, while the federal government accounts for 10% of the spending. The administration has actively tried to help state and local governments compete for the money, with Landrieu noting that even Republican critics are generally eager to receive the funding.

“Some really smart person said, you know, even those people that voted no want the dough,” he said. “This is as close to consensus in my political life that I have seen.”

The Commerce Department last week called on states to begin the process of submitting their plans for universal access to high-speed internet. Biden has also taken steps to maximize the likelihood that construction materials are made domestically, as the money has started to go out.

Landrieu said the two biggest challenges of coordinating the spending have involved offering technical assistance to smaller governments and enabling workforce development to fill the jobs being created. There are 7.6 million construction jobs in the U.S., with employers advertising about 400,000 openings in the sector.

Landrieu said that those challenges are also “an unbelievable opportunity to get right something that we actually haven’t been collectively very good at in the country.”

If the government succeeds with coordination and future administrations follow suit, Landrieu said, “America is going to grow exponentially faster and winning the 21st century is not going to be a challenge for us.”

Windsor board endorses 77-unit apartment building

Richard Chumney

WINDSOR — A local developer has been given the approval to proceed with plans to build a 77-unit apartment building at the site of an old car dealership.

The Town Planning and Zoning Commission voted unanimously last week to sign off on a concept plan for a four-story residential structure at the corner of Poquonock Avenue and Mack Street.

The apartment building, called the Residences at Bowfield Green, will also feature nearly 7,000 square-feet of retail and office space on the ground level, according to Chris Hill, an architect working on the project.

Hill said the building was designed to maximize the amount of apartments that could fit in the 2.3-acre site. He also suggested the building could influence future development as the town expands.

“Our design goals, architecturally, were to treat this as a gateway property into the downtown along Poquonock,” he said.

Site plans submitted to the town show the building will feature 28 studio apartments, 41 one-bedroom units and eight two-bedroom units. The apartments will be rented at market-rate.

Hill said the building will include a fourth-floor tenant lounge, rooftop garden and patio, basement storage units, dog park and bike racks.

A traffic study commissioned by the developers found the building would generate about 1,000 vehicle trips a day with around 114 trips during peak evening hours, according to the application.

David Ziaks, an engineer working on the project, said the complex will feature 116 parking spaces, including 30 garage spaces on the building’s ground level. A handful of on-street parking spaces will also be built to serve the ground floor shops.

The apartment building is the second residential complex to be proposed for the location, which was previously home to a Chevrolet dealership.

Ziaks said a similarly sized building with fewer apartments but larger floor plans was approved about a dozen years ago. However, construction never moved forward on that project.

Ziaks suggested construction on the building could begin as soon as this fall. The complex is expected to take about 12 months to complete.

The commission’s unanimous vote to approve the apartments followed a public hearing during which no one spoke against or in support of the application. Commissioner Jill Levine stressed the economic impact the development could have on the town before voting in favor of the project.

“This is a key gateway into the downtown district,” she said. “We’re working really hard to make Widnsor center a viable place and this is really important.”

Waterbury and Naugatuck leaders approve $2.5M sale of land for Amazon development

Michael Puffer

Municipal leaders in Waterbury and Naugatuck signed off on a $2.5 million sale of a 157-acre property with portions in both communities for redevelopment into a massive Amazon distribution center.

The approval sets off a due diligence period of up to 18 months for Bluewater Property Group, the Pennsylvania-based developer behind the Amazon proposal. Bluewater would have another year to begin construction, Hyde said.

Thomas Hyde, CEO of the Naugatuck Valley Regional Development Corp., said Bluewater representatives have expressed continued eagerness to build and it is possible they would move more quickly than required.

The sale was unanimously endorsed by Waterbury’s board of Aldermen on Monday and the Naugatuck Board of Mayor and Burgesses Tuesday.

Hyde said Waterbury officials will soon begin meetings with community groups to share information about the proposal, including studies of noise, light and other impacts.

Gov. Ned Lamont has said Bluewater’s proposal has the possibility to create 1,000 jobs.

“We are very excited the project is moving forward but there is still a lot that needs to happen before we break ground,” Hyde said. 

Ridgefield replaces ‘dangerous’ trees as part of $4 million Main Street realignment project

Julia Perkins

RIDGEFIELD — The town has taken down dead trees along Main Street as part of an ongoing downtown face-lift.

After studying numerous trees along Main Street, the tree warden, state arborist and landscape architects determined that nine were “dangerous,” according to an announcement from the town.

“After a critical meeting with the CT State DOT, we determined that several trees are threatening the safety of Main Street,” First Selectman Rudy Marconi said in a statement. “The Main Street construction is a wonderful opportunity to take down dangerous trees and replace them with a beautiful native species. The tree work will help beautify the street, comply with the State's requirements, and improve safety.”

This comes as the town works on the second phase of its $4 million realignment of Main Street. The project, which is paid for through 80 percent federal funds and 20 percent state funds, is meant to improve traffic flow.

Included in the project is dedicated turning lanes and an electrified crosswalk, in addition to plantings and the new trees. Construction on the second phase was scheduled to start April 23.

The first phase was completed last year and included the installation of a new transformer and utility work.

Four trees were declared dead and placed in front of Interiors and Designs by Ursula's, the Ridgefield Conservatory of Dance, Silver Lining Consignments and the Ridgefield Library. Five other trees are in poor condition.

Ridgefield planned to clear and replace each tree with one of “similar caliber” that is native to the area, according to the town. The work was expected to be completed by Friday.

After that, work will continue to realign the intersection at Prospect Street, Main Street, and the CVS Parking Lot. All work will occur during evening hours to help reduce daytime traffic.

Local officials are working with the state to ensure the “project timelines meet the needs of downtown merchants and residents,” the town said. Officials meet bi-weekly and plan to provide updates to the community.

New Haven’s Pirelli Building transformed to Hotel Marcel

Mark Zaretsky

NEW HAVEN — The striking, Brutalist — and very, very visible — Marcel Breuer-designed Pirelli Building that has stood empty for decades next to Ikea at the junction of Interstates 95 and 91 is empty no more.

Vacant since soon after Pirelli Tire Co.’s 1988 purchase of the Armstrong Tire Co., which opened the building as its headquarters in 1970, the building this past week was a noisy beehive of last-minute preparations, full of the sounds of vacuums and occasional hammering and power tools.

But on Monday it will settle down and open — just in time for Yale University’s May 23 commencement — as the hippest, most sustainable and eco-friendly new hotel in town.

Say hello to Hotel Marcel, part of the Tapestry Collection by Hilton.

“We’re excited,” said architect and co-owner Bruce Redman Becker of Becker + Becker in Westport. “Yale is a big part of our community” as is Yale New Haven Hospital, and “New Haven is underserved” when it comes to hotels, he said.

The all-electric, 165-room hotel in the city’s Long Wharf area will be New Haven’s third-largest when it opens, right behind the Omni New Haven Hotel at Yale with 306 rooms and Marriot’s Courtyard New Haven with 207 rooms.

Even before it opens, it’s one of just a dozen or so hotels in the United States to have the Green Building Council’s LEED Platinum efficiency rating. It aims to be the first net-zero hotel in the nation — meaning it generates all of its power on-site — although Becker said it could take a year for that to be certified and official.

Hotel Marcel, with an array of solar panels on the roof and atop parking canopies in the parking lot, already has received a Passive Building certification, which means it uses 80 percent less energy than a typical U.S. hotel.

The goal is to use solar power to generate its own electricity for lighting, heating, cooling and hot water, Becker said.

Named after Breuer, the renowned, Bauhaus-affiliated Modernist architect who originally designed it — and with a full architectural story’s worth of wide-open spaces between its second floor and the floor above it — Hotel Marcel is nothing if not iconic.

It’s listed on both the Connecticut and National registers of historic places. Its Modernist design — in a location passed by about 140,000 vehicles per day — was among the final controversies to come out of the urban renewal-era administration of former Mayor Richard C. Lee, who personally matched-up Armstrong both with the site and the architect.

It actually also was named the ugliest building in Connecticut in a 2018 article in Business Insider.

But inside, it’s full of placid, muted earth tones courtesy of design partner Dutch East Design, with a curated collection of art on the walls, both public and in its rooms, that Westport artist Kraemer Sims Becker — Bruce Becker’s wife — pulled together, with an emphasis on female artists.

And it feels pretty homey, in an upscale, Museum of Modern Art sort of way.

“My feeling is that it works better as a hotel than it ever could as an office building. ... You have great access and great views,” both of the city and Yale on one side and New Haven Harbor and Long Island Sound on the other, said Bruce Becker.

Why did Becker, a respected Westport architect whose other buildings have included the 360 State St. apartment building in New Haven and the 777 Main St. (former Hartford Bank) building in Hartford, want to get involved in the rebirth of such a long-mothballed building?

It just grew out of driving by over the years and asking the same sort of “I wonder what’s going on with that building?” questions that everyone else asks, he said.

“I’m passionate about mid-century modern architecture,” said Becker, who grew up in New Canaan “in a house with Marcel Breuer chairs” in it.

“This building by Marcel Breuer is clearly his most visible work of architecture,” Becker explained last week. “After driving by it for all this time, I thought, ‘Maybe this is something I could do something about,’” he said. “... It was just a shame and a waste of resources to just have it sitting there.”

He spent about a year talking to Ikea, which had initially demolished a part of the building’s low-rise section, which had been used for research facilities, and for the most part had used the rest of the building as a giant billboard from which to hang advertisements.

Becker’s group took control of the 500 Sargent Drive building on Dec. 31, 2019.

“It was much easier to execute as a billboard than a hotel,” he said. And while it’s been satisfying, “Had someone else done it, I would have been fine.”

To Ikea’s credit, they weren’t willing to just accept anything when it came to design ideas, Becker said.

“We’re very glad to have ourselves affiliated with Hilton — part of the Tapestry Collection,” which includes boutique hotels “that reflect local culture,” Becker said.

True to form, Hotel Marcel, among other things, will feature some local products in its BLDG Restaurant — and will sell East Haven-made Foxon Park sodas and ice cream from Arethusa Farm in Bantam, among other products, in a “grab-and-go” store for guests to take out a picnic or up to their rooms.

It also has Breuer-designed “Cesca chairs” — named after Breuer’s daughter, Francesca — in many of its rooms.

The hotel is operated by Remington Hospitality, which Becker called “one of the top hotel operators in the country” — and will have more than 8,000 square feet of meeting space.

The two things that are most unique about Hotel Marcel are its design heritage and its sustainability, Becker said.

But it was a long road getting there, with asbestos and other 50-year-old problems to be taken care of — and that beautiful interior essentially was built from scratch inside the shell of the former office building.

Sustainability “is something that I’m increasingly interested in all of my work,” said Becker, who, with his wife, comprise a two-Tesla family — and his is not the first alternative-fueled vehicle he’s driven.

“I think most architects are keenly aware of global warming” and “architects are trying to pivot to make each of our buildings part of the solution instead of part of the problem,” said Becker, who also happens to be chairman of the Electrical Vehicle Club of Connecticut. “I think there is going to be a quick shift to all-electric.”

Some of Becker’s other buildings, including 360 State St., employ the use of fuel cells, although they still use fossil fuels, he said.

But “I think everyone is trying to move as quickly as possible away from fossil fuels,” and virtually everything inside Hotel Marcel, including the kitchen and the laundry, are 100 percent electric.

Becker’s own house in Westport, converted from an older, historic building, also is an all-electric house, he said.

“Believe it or not, it’s easier to finance a project like this,” with financing available through the Green Bank, among other places, he said, and “it’s easier for us to run in the black with this project.”

The solar panels both atop the building and on canopies installed in the parking lot — more than 1,000 of them — produce about 550,000 kilowatt hours a year of energy, which is stored in batteries on-site, Becker said. The panels were commissioned in January, he said.

According to a dashboard app on Becker’s phone, the building’s solar panels currently collect about 216 kilowatts of energy on overcast days, he said. “The building’s only using 168 kw,” he said.

“The solar canopies actually are ingenious, because people like covered parking,” Becker said. They’re ecologically sustainable and “your car doesn’t bake in the sun.”

On Friday, dozens of workers under the direction of General Manager Michael Scandariato were working to get Hotel Marcel ready and make everything perfect for its debut, with work going on simultaneously on multiple floors.

Scandariato said that while the eighth and ninth floors “are coming a bit later,” everything on floors 1-7 will be ready to go.

“We have the entire weekend,” Scandariato said. “This team has been great. Everybody is fully committed and thrilled to be here.”