I Found The Reason - PowerStrokeNation : Ford Powerstroke Diesel Forum
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post #1 of 68 (permalink) Old 03-13-2008, 01:10 AM Thread Starter
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I Found The Reason

…for the fact that diesel costs substantially more than gasoline.

ULSD regulations.

Thanks to EPA regs, all middle distillates (No.1 (aka kerosene), No. 2, Jet A, JP-8, etc) have to meet the 25 ppm standard for sulfur.

The common means of getting sulfur out of oil is to run it through a hydrodesulfurization process (aka the Klaus Train). Hydrogen is bubbled through the oil under conditions favoring the sulfur reacting with the hydrogen to make hydrogen sulfide. An amine removes the hydrogen sulfide and a recycling process removes the sulfur out as yellow powder which is sold. Each pass through the Klaus Train removes about 90% of the sulfur.

Back in the 80s, crude was passed through the Klaus Train once to remove sulfur. Super-sour crude (such as from Venezuela) got run through twice. That resulted in a No. 2 with 5,000 ppm sulfur. Then the low-sulfur requirements of the early 90s came along and that forced the refiners to run refined No.2 through the Klaus Train again. This was uncharted territory running product through the Klaus Train and it resulted in a big change in the properties of diesel fuel. A lot of diesels had all their rubber goods attacked by the low sulfur diesel. Mine cost me $700 to fix. At any rate, this resulted in a No. 2 diesel fuel with <500 ppm sulfur. To get the product down more than another order of magnitude, the refineries have to run the middle distillates through the Klaus Train TWICE more. A total of four passes.

The Klaus Train has become one busy process. Thanks to other EPA regs (New Source Review, 40 CFR 60, 40 CFR 61, and 40 CFR 63) nobody has built a new Klaus Train since Jimmy Carter was President.

Houston, we have a bottleneck.

Only so much middle distillate can be forced through, so the supply is short enough to force up the price, well above that of gasoline which does not require this ultra low level of sulfur.

Good ol’ EPA. Done it to us again.

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post #2 of 68 (permalink) Old 03-13-2008, 03:29 AM
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Re: I Found The Reason

Good find Dave.....still not happy about it!


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post #3 of 68 (permalink) Old 03-13-2008, 03:33 AM
 
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Re: I Found The Reason

Good read Dave, thanks. Makes a little more sense
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post #4 of 68 (permalink) Old 03-13-2008, 03:52 AM
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post #5 of 68 (permalink) Old 03-13-2008, 03:56 AM
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Re: I Found The Reason

Good theory, but why is the price just going up now this spring? ULSD has been sold for over a year. Did a bunch of stations switch over in the last month? What has the price of UHSD done in the past month?
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post #6 of 68 (permalink) Old 03-13-2008, 02:59 PM
 
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Re: I Found The Reason

Dave, your reason sounds logical and makes sense.

But LSD (farm diesel) has gone up just the same as ULSD. I don't know how to explain that other than they raise the price too because they can.
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post #7 of 68 (permalink) Old 03-13-2008, 03:34 PM
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Re: I Found The Reason

makes sense

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post #8 of 68 (permalink) Old 03-13-2008, 06:21 PM
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Re: I Found The Reason

I wouldn't exactly say that ULSD production is the cause of the sudden spike. Check out the weekly supply estimates: http://tonto.eia.doe.gov/dnav/pet/pe...dcus_nus_w.htm

You can compare these current numbers with past months and years. We are currently on average for diesel supply, so we aren't falling short anywhere and there doesn't seem to be a supply holdup. Also, diesel production has steadily increased on average year after year. Another thing to note, we are importing more diesel fuel than we did several years ago, although it is a rather small portion of our total supply of diesel fuel, and shouldn't affect prices in a significant manner.

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post #9 of 68 (permalink) Old 03-13-2008, 06:24 PM
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Re: I Found The Reason

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Originally Posted by Pocket View Post
I wouldn't exactly say that ULSD production is the cause of the sudden spike. Check out the weekly supply estimates: http://tonto.eia.doe.gov/dnav/pet/pe...dcus_nus_w.htm

You can compare these current numbers with past months and years. We are currently on average for diesel supply, so we aren't falling short anywhere and there doesn't seem to be a supply holdup. Also, diesel production has steadily increased on average year after year. Another thing to note, we are importing more diesel fuel than we did several years ago, although it is a rather small portion of our total supply of diesel fuel, and shouldn't affect prices in a significant manner.
So it's just price gouging like usual right now?


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post #10 of 68 (permalink) Old 03-13-2008, 07:41 PM
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Re: I Found The Reason

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Originally Posted by Cat_Rebel View Post
So it's just price gouging like usual right now?
Pretty much.

Best example I ever had was about a year or two ago. I was watching CNN, and they had a report on about how oil companies were warning that crude oil reserves were low. Of course, fuel costs spiked at the pump thanks to that news. Two days later the federal report came out showing that crude oil reserves were at their highest levels for the year. That stuck in my mind and showed me just how unregulated, speculative, and greedy the system really is.

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