July 23rd, 2008 | 
Many people, including me, have espoused the idea that wider use of diesel-fueled vehicles could put a major dent in fuel consumption in the US. One can look at virtually all other countries in the world and recognize that this is patently obvious. It’s easy to find diesel vehicles in the EU, for example, that cover almost 50 miles on a single gallon of the stuff. Try that with a gasoline-electric hybrid. So why aren’t we all driving cars with diesel engines?
With federally mandated low-sulfer diesel now available everywhere in the US and urea injection technology widely implemented by auto makers, clean diesel fuel is available to meet all our pumping desires. Add that to the fact that even at the price premium that diesel currently gets over gasoline, diesel is the way to go – using current fuel costs and average fuel economy for gasoline-fueled vehicles and diesel-fueled ones, diesel cars still cost 23% less per mile to operate (see the EIA Gasoline and Diesel Fuel Update for some great information on fuel prices). Complete and utter no-brainer, right? Bring on the diesels, our new best friends.
Disappointingly, it turns out that it’s not that easy. Csaba Csere, editor-in-chief of Car and Driver magazine wrote a terrific editorial that discusses the diesel fuel dilemma in the US. In the article, Csere states:
Al Mannato, a fuel-issues manager at API [American Petroleum Institute], explains that oil refineries tend to fall into two categories: catalytic cracking and hydrocracking. Most U.S. refineries are set up for catalytic cracking, which turns each barrel of crude oil into about 50-percent gasoline, 15-percent diesel, and the remainder into jet fuel, home heating oil, heavy fuel oil, liquefied petroleum gas, asphalt, and various other products. In Europe and most of the rest of the world, refineries use a hydrocracking process, which produces more like 25-percent gasoline and 25-percent diesel from that barrel of oil. So the rest of the world is already maximizing diesel production. In fact, despite using a refining strategy that minimizes the production of gasoline, Europe still ends up with too much of the stuff, so it exports it to America—about one of every eight gallons of gasoline that we consume.”
Crap. So, we have this monstrous, difficult to change refining infrastructure that virtually guarantees that the supply of diesel fuel is constrained. Csere continues . . .
Meanwhile, Americans are already using most of the diesel fuel that our refineries produce, so if sales of diesel cars take off, keeping the diesel flowing here will put further demands on tight worldwide diesel supplies and probably cause the price to rise even more. Our oil industry could, of course, start converting its refineries from catalytic to hydrocracking and start producing more diesel and less gasoline.
Doing so—and here’s the Catch-22—would reduce the output of gasoline and likely increase its price. Moreover, such a switch, Mannato explains, amounts to a major refinery change that would take 5 to 10 years to accomplish. . .
Hmmm . . . limited supply and increasing demand. Even my basic grasp of economics leads me to see that this is a problem. I guess that diesel-powered cars are not the panacea that I thought they were or, at least, it’s a more complicated situation than I had considered.
Is there a way to change the oil refining situation in the country faster? Perhaps there is a solution in there. The EU countries strategically hiked gas taxes many years ago to drive car buyers to diesel vehicles and aligned demand with production. Having not adopted such a strategy in the US (or any strategy, as far as I can tell), we find ourselves digging out of what could be (will likely be?) an energy nightmare. It’s definitely time for some good ol’ reactive American ingenuity.
My friend Lorne proposes micro-refineries that could adapt quickly and meet regional needs. Is this the way to go? That is, until we find a way to bag fossil fuels altogether.
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