Even diesel fleets have a lot to gain - or lose - from EPA's decision on fuel for cars.
You'll wonder where the yellow went" may become a new slogan of the government, not just an old jingle for Pepsodent. The yellow in this case is sulfur, the subject of a three-way tug-of-war involving the Environmental Protection Agency (EPA), the oil industry, and vehicle makers. Truck owners are among the bystanders who have a lot at stake in the outcome.
Sulfur does more harm to the environment than merely contributing a "rotten egg smell" in the form of hydrogen sulfide. Sulfur dioxide is a major pollutant in its own right and also interferes with emissions control devices.
Fleet owners may ask, "What's that got to do with me? I've been doing my part since 1993, when EPA mandated that all highway diesel be low sulfur." True, but truckers have a role in the current fight as well.
This time the battle is over gasoline, cars, and light trucks. Vehicle makers want the oil industry to get almost all of the sulfur out of gasoline before the yellow gunk has a chance to foul a vehicle's pollution control equipment. Oil refiners say that the technology to desulfurize gasoline to that extent has not been proven and would cost more than add-on devices for cars. They say an ultralow sulfur standard could push gasoline costs up 6 cents /gal. and give foreign refiners an advantage that would drive many of the 160 domestic refineries out of business. (Other sources say the added cost would be less than 2 cents and that vehicle owners would recoup that through less costly emissions control devices and lower maintenance and operating costs.)
Refineries produce both diesel fuel and gasoline from the same barrel of crude oil. The refining process produces gasoline and other light products first, then "middle distillates," including heating oil and diesel fuel. To make low-sulfur diesel, refiners either start with more expensive low-sulfur crude oil or desulfurize the distillates that are destined for highway use.
Before the low-sulfur rule took effect, refiners predicted it would add as much as 7 cents /gal. to the cost of highway diesel. EPA had predicted 2 cents -5 cents . In fact, low-sulfur fuel now generally sells for only 1 cents -2 cents more per gallon than high-sulfur (before federal and state taxes).
If refiners are forced to take the sulfur out of gasoline, they may be able to change production methods in a way that benefits low-sulfur diesel production as well. Alternatively, more refiners may turn to low-sulfur sources of crude oil. Thus, it's possible that a low-sulfur gasoline rule would actually lead to lower prices for diesel fuel.
Unfortunately, betting on either low-sulfur crude or new technology could backfire for refiners and their diesel customers as well as gasoline buyers. If too many refiners try to buy low-sulfur crude, its price will rise an d so will the price of all products made from it, including diesel fuel. Conversely, if refiners turn to new desulfurization techniques, the equipment may be prone to the kinds of breakdowns that have made California fuel more volatile in price. Also, refiners will try to pass along the new equipment's capital and operating costs - both of which could be steep - in the price of gasoline and diesel.
The bottom line: A low-sulfur rule for gasoline has major implications for every truck fleet - diesel-powered as well as gasoline-powered. The final rule will affect the economics of buying, fueling, and maintaining both types of vehicles. Lastly, if enough pollution isn't squeezed out of automobile tailpipes, the EPA may squeeze more out of your truck. Then you'll wonder where your gold went!