International Energy Agency’s just-released Medium Term Oil Market Report: Refining and Product Supply Outlook sees an especially troubling outlook for middle distillate (diesel/gasoil) supplies, in part because of fundamental changes in fuel oil feedstock supplies.

“The results [of this latest report] suggest a downstream environment in which gasoline/naphtha markets remain weak and in which the only way to generate sufficient middle distillate supply is by an unachievable tightening in residual fuel oil,” IEA warns in its December 2008 update to the earlier July, 2008, Medium-Term Outlook through 2013.

The European Union has all-but-finalized a deal that would slash an earlier-proposed 10% biofuels blending mandate by 2020 by around one-third.

However, some “green” groups are complaining that the mandate ought to be cut even further.

Petrobras is steaming over a decision by the São Paulo Stock Exchange (Bovespa) that kicks the company out of the Exchange’s corporate sustainability index (CSI).

Rationale for the decision: Allegedly tardy desulfurization of diesel fuel, contributing to air pollution.

BP’s downstream CEO Iain Conn is publicly calling for an end to diesel tax favoritism in Europe.

In a wide-ranging speech to energy policy experts in Brussels on Nov. 25, Conn had this to say about diesel:

Australia’s Linc Energy announced Dec. 3 that it bought Wyoming-based GasTech Inc. in an all-stock deal.

The transaction paves the way for a planned underground coal gasification (UCG) project aiming to produce at least 40,000 barrels/day of Fischer-Tropsch diesel and jet fuel from Powder River Basin (PRB) coal gasification.

Thanks to plummeting global crude oil and product prices in recent weeks, a window of opportunity has opened for governments to free themselves from the staggering costs and wasteful consumer practices caused by fuel price controls, especially on diesel.

So explains the German Technical Cooperation (GTZ) global transport policy advisor Armin Wagner in a new essay.

Shell and Anglo American, the partners in the proposed “Monash” coal-to-liquids (CTL) project in Australia, announced Dec. 2 that because of soaring costs they’re putting on the brakes.

In a statement sent to Gasification News, Roger Bounds, Project Director, Monash Energy said: “Monash Energy, and its owners Shell and Anglo American, believe that, in the long term, Coal to Liquids may provide an opportunity for Victoria [Australia] to provide domestically produced clean liquid fuels for Australian and international markets.”

ExxonMobil told airport fuel suppliers in a letter last month that it cannot support the use of jet fuel in the new diesel-powered aircraft that are coming on to the U.S. market.

The letter, signed by U.S. General Aviation Operations Manager Martin Tippl, says that the U.S. currently lacks a system that requires testing every batch of jet fuel for cetane number. “Knowing the minimum cetane value allows the establishing of a restart envelope and the definition of engine start limitations,” ExxonMobil points out in the letter.

California Air Resources Board on Dec. 2 unveiled new changes to its proposed “low carbon fuel standard” (LCFS) rules.

Among the changes in the new draft:

Following in the footsteps of an earlier California Air Resources Board rule on heavy-duty diesel vehicle emissions on-board diagnostics (OBD), U.S. EPA on Dec. 4 issued its own final rule for 2010 heavy-duty vehicle OBD.

The rule also makes changes to some existing OBD requirements for smaller highway heavy-duty diesel trucks.