In the 6/9/08 issue of Business Week, there is an intriguing bit of information regarding diesel fuel prices.
According to BW, because refiners are now blending lots of ethanol into their gasoline, those refiners don’t need to produce as much gasoline as they did previously. However, since the refining of gasoline produces hydrogen as a by-product (a fact that I did not previously know), the result of refining less gasoline is–less hydrogen.
Now, here’s the really interesting part. The article states that hydrogen is used to produce low-sulfur diesel fuel, so an unintended consequence of the increasing use of ethanol is that refiners are not able to produce as much diesel fuel (at least the low-sulfur type) as they would otherwise be able to.
Then, factor in the increased demand in Europe and China for diesel fuel, and you begin to be in supply/demand problem. Then, add in the sharply increased use of diesel generators in China in the wake of their two recent earthquakes, and you REALLY wind up with a supply/demand problem.
So–although many of us already realized the folly of using corn-based ethanol for auto fuel, now we have one more problem (besides higher food prices) caused by the increased use of ethanol.
The first politician to admit that corn-based ethanol is not a real solution to the energy problem will get my vote. My guess is that I can stay home on election day.
That is interesting, I hadn’t heard that explanation yet. Just to be nit-picky, the old fuel with 500 PPM of sulfur was called “low sulfur” and the new fuel with 15 PPM is called “ultra-low sulfur.”
Interesting post. I’m among those who have long believed that there was more politics than science in the “ethanol as a solution” movement. Add to your posts the increased diesel fuel that would be used by the agricultural community to produce enough ethanol to make a dent in the gasoline demand and the “logic” really gets weird.
I become more convinced over time that the only real solution is, ultimately, development of decent, usable 100% electric cars and an infrastructure to support them. And eventually, as storage capabilities (battery systems) evolve, the electric vehicles could even evolve into solar supplemented systems. Perhaps my kids will see the day.
I hope Tesla Motors succeeds. Nicolae (sp?) would be so proud.
The US imports 13% of its liquid fuel (diesel and gasoline) which is refined mostly in Europe but also in the Middle East in “export refineries”. The strong demand in Europe and the rest of the world for diesel of any kind has put a temporary squeeze on the supply.
Business Week SHOULD know that you can make hydrogen from NATURAL GAS, which we have plenty of. I am currently involved in a major refining project that has a very large captive hydrogen plant for that very purpose.
However, I agree that ethanol from corn is a really dumb technology, and is now roundly condemned worldwide, since it coincides with food shortages and decreasing cropland available to increase production. It’s the only thing I agree with Fidel Castro on!!
There is considerable flexibility in the product yield from a refinery with respect to gasoline, diesel, jet fuel and heaitng oil. The new refineries are all built to use heeavier crude oil feeds and yield more diesel.
Interesting and may well be true. However it is incomplete as it only looks at one factor. Note: they did not say that it was the only factor or even the largest factor so I find no fault with the report as presented.
That said there are quite a few factors with changing the gasoline/diesel ratios. They are working on the problem and in time I believe they will even out the ratio issue.
Another side issue is the cost of ethanol. With the expectation of high ethanol demand this fall and winter, the farmers of the corn belt have increased their corn acreage, but in my area and apparently many others, the spring planting did not go well so they are expecting a smaller crop than they had hoped. Of course harvest is a long way off and at lot of good and bad things may happen by then and it may well be a large harvest. That said, the crops that were grown on some of those fields now growing corn, are going up in price. You can’t win. There is no free lunch.
Thank you for posting that information. I’m also of the opinion that corn-based ethanol is more of a political stunt than a solution to anything.
I live here in wheat/cattle/corn country and this whole thing is nothing more than playing the government subsidy game. Much is made of farmers scraping by (stereotyped as overalls, beat up old truck, up in the morn before the rooster crows, etc.) and it’s claimed that it costs more to produce a crop than what it brings at the market.
Whenever a plot of farmland goes up for auction here, even a measly 20-40 acres, farmers line up by the hundreds to jump all over that ground.
Why do that if it’s a losing proposition.
Since it appears that the upcoming elections will be Tweedle-Dee against Tweedle-Dum I’m probably going to vote a straight apathy ticket this year.
Speaking of subsidies, I understand that the corn growers are subsidized and get paid for the ethanol crop. Someone has a very large back scratcher.
I don’t know if I agree with much of that article.
I do believe that a little bit of the increase in diesel fuel prices has to do with the extra cost to produce ultra low sulfur diesel. It’s not really part of the story, but Ultra Low Sulfur diesel is proving itself to be a major problem all of it’s own. First of all, the sulfur in diesel is a substantial portion of the lubricant portion of the fuel. It’s akin to when they took lead out of gasoline. Diesel engines get less mileage out of the low and worse out of the ultra low sulfur diesels than they did before. Hence, we are using more fuel, maybe something like between 10 and 15% more fuel than we were before the fuel formulation change. Additionally, it’s causing problems with the older engines and the newer engines have so much pollution garbage hanging off them that they won’t run either and it’s causing problems in much higher cost in maintenance and repair for diesel owners.
One of the major problems with these ethanol, bio diesel, and coal gaseous conversion plants being promoted is the politics v’s reality. The reality is, the fuel distribution system in the US centers on refineries close to the coastal areas where they can be reached by oil tankers. The fuel is then shipped by pipeline to distribution hubs and then trucked to stations. The problem with ethanol and soy diesel is the corn and beans are grown primiarily in the midwest and since the rule of thumb is you always transport the higher value product (ehtanol not corn) the refineries are being built where there are no pipeline heads to send the fuel out. There are dingle dorks in Eastern Kentucky buying E-85 ready vehicles when the fact is the closest ethanol plant is likely somewhere in Indiana. There’s no possible way that ethanol will ever reach pumps in Eastern Kentucky, at least not anytime in the next 20 to 25 years. Why? Our pipeline comes out of Louisiana not Owensboro, KY. Here, the politicians that be are courting a coal gasification plant. We have plenty of coal. We have a hub for almost all the coal railed out of Eastern Kentucky and yes, they could produce it cheaply here, but what exactly would they do with it once it’s produced? The closest we are to Colonial Pipeline which supplies us is 90 miles to Knoxville, TN and even at that, it’s a dead end line and not a shipping hub. You can’t truck fuel very far and it be reasonable. Trucks can only haul around 8000 gallons legally and in 100 miles to and from Knoxville they are burning 50 gallons of it. Before ethanol or soy diesel or coal fuel or whatever becomes practical we are going to have to change a lot of the distribution system meaning major construction projects the permits to which would be years to obtain.
Blaming the farmers for what’s going on with ethanol is about ridiculous, and no, nobody is getting government subsidies to plant corn, the price right now is well above subsidy level. Really, it’s a good thing. If corn had stayed at $3 with fertilize headed from $150/ton 8 years ago to $700/ton today and fuel up from 60 cents to $4.50 and metal for implements and tractors sky high, there wouldn’t be any corn planted for $3 a bushel. You couldn’t anywhere near come out on it. Basically, the ethanol market has raised the price of corn up to a fair level that is profitable on the farm and trust me, it will promote bringing more land on line that was previously fallow. The ones getting the government incentives on ethanol are the companies like Con Ag and ADM who are building the refineries, and yes, the government is pouring money at it.
Back to the diesel price. One of the big factors nobody is mentioning is the way the price is being manipulated. If you think large users like CSX rail or JB Hunt or Swift trucking are paying the posted price for fuel, you’re sadly mistaken. It wouldn’t surprise me a bit if CSX wasn’t paying more like $3.50/gallon and the large trucking companies paying about 50 cents a gallon less than posted when it’s all said and done. They get rebates and kickbacks from Pilot, Flying J, TA, whoever. The deal is, they pass the fuel surcharge on as if they were paying the advertised price, hence they are in fact making money off the price of diesel. The market what it is in the trucking industry, there are fewer independents than ever before in history, not enough to be a major factor. If this stunt had happened in the 70’s, they’d have long since parked this country and demanded a swift change. The system is set up as a payoff to the powers that be and unfortunate as it is, it’s not likely to soon change.
Skipper
Question then. Around here many corn fields are allowed to grow, dry out in the field, followed by plowing them under with not one ear of corn being harvested or used for anything.
I find it hard to believe a farmer is going through all of this work for amusement purposes and is not receiving something for doing this?
I agree with ok. I also live in the corn belt and the local politicians all agree, to get elected you need to support the corn growers and anything that sells corn and increases it’s selling price is going to get you elected.
Having said that, I do support additional research and even test programs, but what we have is really a farmer relief program for farmers who don’t need it.
Blaming the farmers for what’s going on with ethanol is about ridiculous, and no, nobody is getting government subsidies to plant corn, the price right now is well above subsidy level.
It is the politicians who are catering to the farm votes that are the problem. The farmers are just voting for those who make them more profit and it can be subsidies or ethanol. So in an indirect way they are the cause.
…but Ultra Low Sulfur diesel is proving itself to be a major problem all of it’s own. First of all, the sulfur in diesel is a substantial portion of the lubricant portion of the fuel. It’s akin to when they took lead out of gasoline. Diesel engines get less mileage out of the low and worse out of the ultra low sulfur diesels than they did before. Hence, we are using more fuel, maybe something like between 10 and 15% more fuel than we were before the fuel formulation change. Additionally, it’s causing problems with the older engines and the newer engines have so much pollution garbage hanging off them that they won’t run either and it’s causing problems in much higher cost in maintenance and repair for diesel owners.
This is not accurate, although many of these stories are being circulated:
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Sulfur is not a lubricant in diesel fuel and serves no useful purpose. The issue with lubricity has to do with the process that is used to remove the sulfur affecting the lubricity of the actual fuel. This is addressed by additives to restore the fuel’s to the lubricity requirements of the ASTM standards, it’s not a problem.
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The reduction in heating value (energy content) of ULSD is a maximum of 1-2% compared to LSD (I’ve seen more than a couple of test reposts on ULSD from various sources). In many cases there is no measurable change in heating valve. Again, the potential loss of heating value is related to the additional processing, not the actual reduction in sulfur.
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The only legitimate “problem” that has been identified is the potential of old fuel system seals developing leakage with ULSD. In most cases we are talking about old seals that should be replaced anyway, where the ULSD was the “last straw.” This should be a one time maintenance issue. Note that many “old diesels” have been using this fuel in europe for years.
In reality, any well maintained diesel will operate on ULSD without significant issues, all “old mechanic’s tales” aside.
I’m not in the grain belt, but in tobacco and cattle country. I know with tobacco they are growing on contract. Otherwords, they contract with Phillip Morris or some such to provide X number of pounds of tobacco at Y grade and Z price. A lot of farmers will plant extra tobacco just in case something happens to lower their production such as drought, hail storm, disease, or the like. If Phillip Morris wants 50,000 lbs from you they’ll not be happy if you show up with 30,000 and I have known farmers to have to go out and find tobacco to finish out their contract. Unlike corn, they can also hold tobacco out of the market for a year and sell it the next year if the situation mandates.
When you are talking about extra tobacco, the majority of tobacco bases are in the 50,000 pounds or less range and a typical acre will produce around 3000 lbs. You’d have to really know your stuff to recognize an extra acre or 2 on a tobacco patch.
I’m sure corn is grown a lot of the same way. I don’t know all the ins and outs of it, but I’m sure there are contracts and the like for growing and selling it. The thing about corn is the acreage isn’t small like tobacco is, an extra 200 acres might not be much of a buffer to someone growing 3000 acres of corn.
Corn is a lot more water sensitive than tobacco is. Tobacco, oddly enough, does pretty well in a drought where corn won’t do much without rain.
There’s all sorts of uses for corn. There’s sweet corn that we eat off the cob or canned. There’s grain corn that’s used for a bunch of things (including ethanol). Super sweet corn that they use to make sugar from. Silage corn that’s fed to livestock. A lot of times corn that you see that’s allowed to dry up in the field is chopped for silage to feed cattle or hogs. With you likely being from Oklahoma, that’s a big feed lot state, and it wouldn’t surprise me if that’s not what you are observing, corn being grown for livestock feed. In which case they’ll harvest and chop it for silage. Silage is expensive to store and a lot of times here you’ll see silage corn stay in the field until it’s needed for feed.
The politicians in this country have created a farm mess over the years. You don’t hear too many people in agribusiness say what I’m going to say here, but the fact is, we’d be far better off if the government would come up with an agriculture exit strategy and get out of the farming business kind of like they did with the tobacco business. I’m not sure if it’s the farmers they are pandering to or the public. Bear in mind, the farming population is less than 2% of this country unless the dumbocrats figure out how to give the illegal Mexicans a vote, then it’ll be a tad higher. Without the government meddling, a gallon of milk would probably be closer to $10 per gallon than the $5 it is now. Why? That’s what it costs to produce it, transport it and sell it. As is, the government is spending $10 per gallon in tax money to get a $5 per gallon break in price at the store. I don’t think the government wants the backlash that would come from the public if the price of groceries went to what it actually costs, so they artificially manipulate the markets. I believe their thinking has more to do with the general public than it does the farmers themselves. In the process at times it destroys the price farmers receive and makes life difficult. In the days of $3 corn that was right at the subsidy level and the government at times ended up paying a quarter a bushel or something like that in subsidy. Of course they limit the number of acres they’ll pay it on or number of bushels. This at times left crops not worth harvesting. There’s a lot of expense to a crop like corn other than just planting and harvesting. There’s drying, housing and trucking. With the $9 price things are hovering around now, that’s well above subsidy level and will promote more corn being grown. Shoot, if there were a market for grain corn that didn’t require me to truck it 250 miles from here, I seriously thought about it on my place this year. The problem is, I don’t have enough land to justify the machinery and the transportation expense to haul the product to market. There are all sorts of interesting corn developments on the horizon. In some cases they are growing insulin on corn. Genetic engineering has allowed the insertion of a gene that makes insulin part of the corn’s list of products. Previously, insulin came from the pancreas of cattle. This sort of corn has always been high dollar. As technology improves, other drugs may be able to be grown or synthesized from corn. Ethanol is a pretty straight forward use that’s always been an option.
People want to go back to a time when a farmer was like that cartoon guy with a straw hat, pitch fork, 2 pigs, milk cow and some chickens. That’s never going to happen again, if it does, we’d all starve to death. Farming is a very complex business these days. Gone are the days that a $150 John Deere plow and 2 $250 mules could plant 40 acres of corn and be profitable. I can remember growing up when 100 acre farms sold for $25,000. Now it’s more like $12,000 per acre and more because of the pressure to build subdivisions on farm land. Increased value of the land means increased property taxes and inheritance taxes and people wonder why farms are incorporated and not so called family owned farms anymore. 50 years ago when people were farming with mules and 8N Fords they were producing 40 bu/acre of corn or less. That won’t pay the bills on the land today and in most cases we are producing 180 to 230 bushels per acre. It requires machinery and technology to do it. I keep hearing people belly ache about the gadgets they have in tractors today. Most of what’s in that tractor is there to help with the production of the crop. Yes they have very good GPS’s on equipment today. They want to know if there is a pocket of land on a 500 acre field that isn’t producing what it should so they can run soil tests and find out what it needs to fix it. Yes, machinery is getting larger and larger, it has to to run the newer equipment which has ever increasing horsepower requirements. My little compact can pull a bottom plow all day long but it ain’t got a prayer in handing a no till seeder that requires much more hydraulic capacity and more horsepower. The newer equipment is so expensive that you can’t justify using it on smaller acreages. If you look at the changes in something simple like hay over my lifetime it’s been pretty dramatic. I used to have a farmer client who recently died in his early 90’s. He had a small farm and a hand full of cattle. The man took up hay with a team of oxen. He mowed and raked it with the team, forked it onto a wagon and then piled it in a crib he’d built in his barn. He farmed this way up till about 2 years ago when he went to the nursing home. Of course he was an exception to the rule. Still, I’ve took up many square bales of hay that were mowed raked and produced with relatively small equipment like 8N’s and 9N’s and Massey 35’s or 135’s. Today most hay is rolled and baled before it’s completely cured. The disc mowers used require a lot more horsepower than the old sickle bar mowers and the tedders and rakes require hydraulics that weren’t necessary a few years ago. Then you have to move the ton roll of hay around and that need a larger machine. The hay roller itself needs a lot of power, and most people are wrapping the rolls today in plastic and the wrapper is another power intensive deal. Where 20 years ago, $25,000 would be plenty enough to buy a tractor, baler and rake to put up hay, today, you’ll be lucky if you can make a down payment on the tractor for that and add in the disc mower, hay roller, tedder, and wrapper and you’ve easily got $100,000 in equipment to take up hay. My field is 25 acres, you can’t afford that for 25 acres, so your farm has to grow in size. It’s a vicious circle.
Skipper
I’m sticking to my experience. I lost 2 miles per gallon when we went from Regular diesel to Low Sulfur and another mile to the gallon when we went from Low to Ultra Low and that was in the same truck same engine and yes, it did initially eat the injector seals out of my 7.3 Navistar, or at least I had to replace them within 2 months of the introduction of the fuel.
At originally 20 mpg in the truck, loosing 3 mpg is roughly a 10 to 15% drop in mileage. I can really tell the difference in the engine’s performance between the 2 fuels. On my newer Dodge, it definitely runs better on the low sulfur than the ultra low. I’m not the only one saying that, a lot of truckers and equipment operators are saying the same things.
As with most things on paper, I’m more inclined to believe it in the real world. That 6.0 liter Ford I had was supposed to have almost 100 horsepower and 150 pounds of torque more than the older 7.3 I had. That’s what the Ford engineer was telling me but he wouldn’t get in and go for the ride I was going to take him on with that older truck when I tossed the chain down in the parking lot to hook the 2 trucks together.
Skipper
Thanks Craig for debunking the diesel myths. We went through the same hysteria when lead was phased out of gasoline. The only downside I see to the new diesel is the complexity of the exahust treatment, but that will become more reliable and easier to maintain in the future. European drivers seem to be coping quite well so far.
I receive Diesel Progress magazine regularly, and it is full of whining articles by the trucking and construction companies, who don’t want things to change, and think the California Air Resources Board (CARB) is evil incarnate.
The new diesel technology has been an incredible challenge for the lubricant manufacturers, however, and they have responded well. But overall, operating a Class 8 heavy hauler is now more expensive in maintenance, although the cleaner running will no doubt increase engine life.
No it’s not going to increase engine life because the diesel is not burning any cleaner than it ever was. That statement shows how little people like you and the stupid government actually know about what’s going on.
The old style diesel engines would run forever relatively easy without problems. The biggest reason is, they were as simple as it could possibly be to make an engine. You had mechanical injectors and mechanical fuel pumps. If it broke, it was pretty obvious what it was, you fixed it and when on. Now there’s electronic injectors and God awful complicated systems used to fuel the engines. Look at that screwed up mess Ford is using on the Navistar engines. There’s not a dang thing simple about that fueling system.
That’s the first thing, but the second thing and the one that’s going to kill these engines is how the government is requiring the exhaust to be handled. For a diesel to be efficient and to run good and for a long time the best thing to do is let the exhaust OUT of the dang motor as swiftly as you can. The newer engines all have EGR systems on them that are recirculating the exhaust back into the engine to be burt again with the idea that it will reduce emissions. Sure it does, it leaves all the crud in the motor which is causing the problems with the engines.
The soot from the exhaust is sooting up the turbo chargers, the valves, the intakes, and every other part of the engine it comes into contact with. Ford put a $110 air filter on their engines that was in a screwed up over engineered box that took 30 to 40 minutes to change the filter because putting the blind tabs and slots back together was an exercise in holding your mouth right to do. Then they threatened you within an inch of your warranty if you put a K&N box on it saying, “This engine needs the cleanest air possible.” Then you turn around and re shuffle the exhaust back into the intake, clean air intake my foot.
The problem is the exhaust is being treated by the engine and not gadgets somewhere else. Of the people I’ve talked to that have the newer stuff, they are almost all having some sort of problems with them. My Dodge was one of the last of the Mohicans not to have particulate filters and the garbage on the newer engine, and I’m glad I don’t have to deal with that stuff. I’ve got friends with later models and almost all have already had problems.
Skip
I agree Docnick, the lubricant issue was a challenge but they’ve had almost a decade to address it and seem to have succeeded; but we will still have to listen to years of whining (just like unleaded gasoline) while every engine problem for the next decade is blamed on ULSD. Try hanging out in the diesel forums and listening to some of that non-sense. At least the snake oil salesmen are making some money off this hysteria by selling worthless additives. Unfortunately, it will take a generation for all this noise to go away, just like with unleaded fuel.
I’ve got about 100K miles on my diesel benz engines with ULSD, I did replace an injection pump that developed a leak (at 350K miles) but have had no other fuel related issues or noticeable changes in mileage. As I said, there are huge populations of older diesel cars/trucks running on ULSD in other parts of the world. It’s simply not an issue if you maintain your engines.
Regarding the impact on heating value, I have seen this issue addressed at several nuclear power stations who are still transitioning to ULSD and actually have laboratory analyses performed before accepting each new batch of fuel. I have never seen a heating value reduction of more that 2%, and some analyses show no measurable change. This is the guidance that was provided to the industry by the NRC:
No comment on the farm welfare aspect of this issue (that’s been silly for years). (-;
You Mercedes is how old?
My 1970 something or other tractor isn’t having much of a problem with it other than I’m running a little treatment through it every now and then. If it does happen to ruin the seals in the injector pump, I suppose the tractor becomes a heap of junk because the pump isn’t available anymore. I will say this, it doesn’t run as smooth as it did before although that could be age and nothing more.
The new diesels, the problem isn’t the fuel it’s the idiotic systems being installed on the engines pumping exhaust to where it’s not supposed to be. It’s a whole other issue than the fuel itself, but it’s part of the same legislation that mandated the fuel.
Skipper
You Mercedes is how old?
My diesels are '82 and '83. Both have a EGR (they were required decades before ULSD), which does put some soot in the intake but doesn’t cause any damage. The new benz diesel use the “bluetec system” to process the exhaust (I believe the asian manufacturers have a different technology). I don’t know/care what the domestic manufactures are doing on their diesel trucks.
The primary advantage of ULSD in the U.S. (aside from reduced emissions) is that allows the import of current diesel technology that has been used in the civilized world for quite a while now. Personally I prefer the older/simpler engines, but the only way to get “joe public” in diesel vehicles is to import the latest technology.