Diesel Fuel Prices Are Effecting Everything Find Out Why.
In 1892 Rudolf Diesel invented what would become known as the diesel engine. This engine would forever change the automotive industry. The diesel engine is capable of functioning on modified vegetable oil or diesel fuel. In the United States crude oil is the most common ingredient in refined diesel fuel. Diesel fuel is most widely used by commercial businesses to deliver products to the market. Commercial machinery and farm machinery also use significant amounts of diesel fuel. In order to understand our economy it is important to understand the role diesel fuel will play in the future.
Diesel fuel is produced to different levels of distillates or grades. Distillates are simply liquids that have been distilled or refined to a certain grade. The most common distillate used by diesel engines in the United States is No.2. This fuel can also be used for heating. Distillate No. 2 is used because it has a low amount of sulfur. Due to new regulations effecting sulfur content in diesel fuel Low Sulfur Diesel (LSD) fuel was replaced by Ultra Low Sulfur Diesel (ULSD) fuel.
The difference between LSD and ULSD is noticeable in the parts per million (ppm). Low Sulfur Diesel fuel has a maximum of 500 ppm sulfur content. Ultra Low Sulfur Diesel fuel has a maximum of 15 ppm of sulfur. By the year 2010 vehicles on the highway will be required to be 100% ULSD. By the year 2015 it has been predicted that almost all diesel fuel used the United States will be ULSD.
A barrel of crude oil can produce many products including liquefied petroleum gases, heavy fuel oil, jet fuel, diesel fuel, gasoline and heating oil. Vegetable oil can also be used in conjunction with other ingredients to produce Biodiesel. Biodiesel can also be made from animal fats or recycled restaurant grease. This biodegradable fuel has proven to reduce the emissions of particulate gases.
The primary fuel used in delivery vehicles, trains, buses, boats, semi trucks, and construction equipment is diesel fuel. Vehicles on the highway used 75% of diesel fuel in 2007. Off-highway equipment such as motors used in railroad, military, farming and construction used the remaining 25%.
The United States imported approximately 4.5% of its diesel fuel from foreign countries In 2007. Canada and the Virgin Islands were the major contributors. However 66% of the crude oil used to produce the diesel fuel was imported from foreign countries in 2007. After production most diesel fuel is transported either by rail, pipeline or barge from the refineries to gas stations across the country.
Many people remember when gasoline was cheaper than diesel fuel. Since September 2004 that has not been the case. The increase in demand and the decrease in production has created this situation. The United States, China and Europe continue to need more and more fuel. At the same time production has gone down in the United States because of the transition to ULSD regulations.
As countries become more modernized their demand for crude oil increases. In recent years the demand for crude oil has gone up and the supply has gone down creating an increase in the price. The Organization of Petroleum Exporting Countries (OPEC) controls approximately 2/3 of the world’s crude oil reserves. OPEC sets a maximum production limit on 40 percent of the world’s crude oil reserves. This limit on production will continue to have negative effects on the price of diesel fuel.
