Capital Commerce: Diesel dilemma: fewer blends, maybe more sulfur
In its drive to bolster the oil-refining business, Congress has caused some headaches in the auto industry. The Gasoline for America's Security Act, which narrowly passed the House of Representatives last week, would chop the number of fuel formulas refiners must make in various parts of the country from 17 to 6. The hope is that by reducing the number of so-called boutique fuels refiners are required to churn out, the overall cost of diesel will drop–good news for fuel makers.
Not so for auto manufacturers that have bet heavily on a new generation of "clean diesel" fuel technology that relies on the availability of an ultralow-sulfur blend. The bill is short on details, leaving the final decision making in the hands of the Environmental Protection Agency. But it presumes there will be just two types of diesel on the market. That would upend the compromise plan that the EPA adopted a few years back, allowing sale of multiple types of diesel for vehicles, along with marine and locomotive engines, as refiners phase in ultralow-sulfur fuel.
"These proposals have us very concerned," says Dan Brouillette, Ford vice president of governmental affairs. Automakers have made substantial investments in technology designed to work with low-sulfur gasoline, in an effort to improve vehicle performance, durability, and emissions. The new bill could allow more high-sulfur blends to stay on the market. "Sulfur is like a poison to catalytic converters," warns Brouillette. "Part of the strategy that has helped us reduce smog-forming emissions was based on cleaning up the fuel going into vehicles. Dirty fuels deteriorate catalysts and sensitive electronic sensors, making it very difficult to produce clean emissions."
Carmakers have been planning a big rollout of diesel vehicles in the United States over the coming years, and some diesels, like the Jeep Liberty SUV, have already arrived. Diesels were popular in the 1970s but virtually disappeared over the following decades, due largely to a noisy, dirty reputation. But new "clean" diesels have remained popular in Europe, partly because diesel engines are more fuel efficient than most engines that run on gasoline. Diesel also historically has been cheaper than gasoline, though it's now more expensive due to the shortage in U.S. refinery capacity–a problem the House bill is intended to solve. Next up: The Senate takes a crack at the matter in its post-hurricane energy bill.
Capital Commerce tells usnews.com readers how decisions made in Washington affect business.
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