In a response letter to U.S. Senator James Inhofe (R-Okla.), U.S. EPA blamed the news media for reporting that diesel shortages in some parts of the U.S. Midwest were due in part to refinery, pipeline and terminal transitions to ultra-low sulfur diesel (ULSD) fuel.
“Contrary to press reports, the fuels industry has indicated that the transition to ULSD is not a primary or even a secondary factor in the current tight supply of diesel fuel,” EPA’s letter to Inhofe says. “In many cases, the transition to ULSD had already occurred prior to the market tightening.”
However, contrary to EPA claims, fuels industry spokesmen did in fact tell news media that the ULSD transition was indeed a factor in temporary shortages earlier this summer.
For example, Magellan Pipeline told us in July that some terminals ran out of fuel in its markets due to a combination of high demand and “the conversion to ULSD.”
Similarly, in that same month, reports from Nebraska, Kansa, Iowa, South Dakota and Missouri all confirmed that “the driving force behind the fuel shortage is a shutdown at southern refineries in order to convert equipment and pipelines for a new ultra-low sulfur diesel.”
On the same note, the Colorado Petroleum Association last week told the Vail (Colo.) Daily News that ULSD modifications at Suncor’s Denver refinery this year had triggered production interruptions that resulted in temporary diesel shortages and higher prices in the Rocky Mountains area.
Nevertheless, EPA’s letter to Inhofe points out that U.S. refiners have now boosted ULSD production to nearly 2.4 million barrels/day, “equivalent to nearly 90% of the nation’s daily consumption of highway diesel fuel, far more than the 80% that refineries were required to produce by this point.
“In addition, since the June start date [for ULSD production], the overall production of highway-grade diesel fuel, ULSD and low-sulfur diesel, is greater than for the same period in 2005. Therefore, not only have U.S. refineries been successful in their transition to ULSD, in the process they have increased overall production of highway-grade diesel fuel,” EPA said.
What’s more, “the transition to ULSD by pipeline and terminal companies was accomplished by the September 1 [EPA] deadline. Based on our direct contacts with the petroleum industry, as well as available data, it is clear that the transition to ULSD at retail stations is well underway. We are confident that the remaining phase of the transition to ULSD from the terminal to the retail level will be accomplished by October 15, as required [by EPA].”– Jack Peckham