Highway diesel fuel supply in the US will meet 2006 demand, say engine manufacturers

28 February 2002

The US supply of highway diesel fuel of a 15 ppm sulfur cap, to be introduced beginning mid-2006, likely will meet passenger and commercial transportation needs, according to a study released by the Alliance of Automobile Manufacturers and the Engine Manufacturers Association.

The study, conducted by MathPro Inc., addresses petroleum industry claims that diesel fuel might be in short supply in 2006, when the fuel must meet ultra low sulfur diesel (ULSD) standards required by the EPA. The 79-page study assumed that EPA would require a 100% introduction of ULSD in 2006, which is more challenging than the actual program requirements. Refiners have several methods to comply with the program, including a phase-in of ULSD.

The study examined regional markets for refined products and concluded that refineries are likely to find the economic driving forces for investment in ULSD capacity to be substantial, and alternatives to ULSD to be unattractive. The study also concluded that domestic and offshore market forces would make widespread abandonment of the highway diesel fuel market unattractive to refiners. An analysis of economies of scale suggested that refineries—especially small refineries—with high cost ULSD production could reduce their costs significantly by participating in joint production arrangements.

Engine manufacturers in the US and worldwide have been supporting introduction of low sulfur fuels, both gasoline and diesel, which provide them with more flexibility in introduction of modern exhaust aftertreatment devices to meet future emission standards.

Source: Engine Manufacturers Association