Jeff Hartman loads his fuel truck with diesel in 2009. Midwest businesses have complained of a diesel fuel shortage that is driving up prices. (Fremont Tribune file photo)

Diesel fuel is in such short supply in the upper Midwest that people in the fuel industry say it's the worst shortage they can remember.

"It's as bad as I've ever seen it," said Tom Garner, the energy division manager for Farmers Cooperative, who's been in the business 33 years.

"I've never seen anything like it in my life," said Dick Salem, president of Lincoln Trucking Lightning. "We went through three big-time shortages in the ‘70s, and it was never like this."

The shortage particularly is bad in the Lincoln area. One of the two fuel terminals south of Lincoln hasn't had any diesel fuel for at least a month, Garner said, and the other has had sporadic supply that runs out in a couple of hours.

On Wednesday, neither terminal had any diesel, Garner said.

Bruce Heine, a spokesman for Magellan Midstream Partners, which owns the Lincoln terminal that Garner said hasn't had any diesel for at least a month, said a combination of factors is contributing to the lack of fuel.

"We have recently encountered extremely high demand for diesel fuel at our terminals in the northern tier of our system, which is related to the seasonal agricultural harvest, increased regional production of oil and natural gas, and product outages at other petroleum distribution facilities in the region not owned and operated by Magellan," Heine said in an email to the Journal Star.

He said diesel has run out at the company's terminals for anywhere from hours to several days.

"In general, we simply have not received adequate supplies from inventory owners to meet the recent demand," Heine said.

Much of the "northern tier" demand that Heine refers to is coming from oil field operations in western North Dakota, where the boom in the Bakken oilfields has led to tremendous demand for diesel fuel to run heavy equipment.

Mike Rud, executive director of the North Dakota Petroleum Marketers Association, told the Bismarck Tribune recently that a conservative estimate would be that about 2 million gallons of diesel fuel alone are being shipped into the Bakken oil patch.

Other possible reasons cited for the shortage include more export demand and refinery turnaround in which the refineries switch from making summer diesel blends to winter ones.

The shortages have helped to drive up the price of diesel, which this week reached nearly $3.90 a gallon nationally, up more than 77 cents from a year ago, according to the Energy Information Administration.

In Nebraska, the price is slightly higher, nearly $3.92 a gallon, according to AAA.

Despite the shortages at the terminals, those who need diesel have been managing to keep enough on hand to meet customer demand.

"I haven't run out at all," said Rick Wordekemper, energy division manager of Farmer Cooperative Company in Waverly. "I've been a little uncomfortable a few times, but it's been fine."

Wordekemper said he was advised a few weeks ago to build up his stocks, and he did so.

Garner said his company also stockpiled diesel before the shortage got bad.

"We kind of saw this coming early in the harvest, and we stocked up," he said.

Dave Shoemaker, owner of Shoemakers Travel Center in Lincoln, said he, too, has managed to keep enough diesel in stock.

"We've been working hard at keeping full, but we've been pretty lucky," he said.

One of the reasons companies have been able to keep enough diesel in stock is that they've gotten creative about getting it.

Garner said that for the first time ever, he sent tanker trucks to a terminal in Council Bluffs to get diesel.

Salem said he's sent tanker trucks to terminals in Council Bluffs, Omaha, Columbus and Geneva.

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Reach Matt Olberding at 402-473-2647 or molberding@journalstar.com


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