CO2 emissions of diesel vs. gasoline and ethanol fuel production

[Tin Man]

To me, importing refined gasoline from Europe doesn't mean it is underproduced here in the US, just that they are dumping their oversupply and therefore make it more economical for US retailers to buy their gasoline while US refiners produce more diesel for profit/export. This is why when the requirement for ULSD came into being US refined diesel became marketable on the international scene, which required it earlier.

TM

 

[turbobrick240]

The amount of gasoline versus diesel will vary depending on the source of the crude oil. I think your "twice the gallons" generalization is grossly overstated.

It was meant to be a generalization. According to the EIA- in 2016 US refineries averaged around 20 gallons of gasoline per barrel crude and 11 gallons of light distillate . Most, but not all, of the light distillate being sold as diesel fuel. There are fairly easy ways to alter that ratio, but I think the GREET models are more about what is done than what could be done.

 

[CraziFuzzy]

The mix of diesel to gasoline from crude varies by the quality/style of the crude. Whenever the demand mix doesn't meet the mix in the crude, they use more expensive methods to shift production away from the 'natural' mix in the crude. This ends up driving up the price of diesel and gasoline together, and they will continue to adjust these production number to maximize the profits of the refinery. The biggest shifts in this are from new previously untapped sources of oil, that may have different characteristics, and major shifts in demand (such as economic shifts causing an increase or decrease of truck/train use). These are the things that will result in diesel being more expensive than gasoline one year, and the opposite true the next.

 

[turbobrick240]

I suspect I'm correct about this, but the US exports refined diesel and imports refined gasoline from Europe.

Gasoline traditionally is a waste product of diesel production, which if my econ 101 knowledge is correct, makes production of diesel the profit center and gasoline not so much. Therefore, gasoline is cheaper per gallon (keeping in mind higher taxes on diesel as well as various regulations on gasoline qualities) and is the secondary product. It would surprise me if refineries were not set up to bring more diesel and less gasoline. This explains the price differential but also makes gasoline production irrelevant to energy output. Diesel production drives our use of transportation crude oil, not gasoline. So to create less CO2, as well as other "pollutant" production (which arguably is better for diesel) improve the efficiency of everything, but concentrate on diesel.

TM

I don't think gasoline is a waste product of diesel production any more than diesel is a waste product of gasoline production. They are both very valuable commodities. We consumed about three times as much gasoline as diesel in the US last year.

 

[Tin Man]

I don't think gasoline is a waste product of diesel production any more than diesel is a waste product of gasoline production. They are both very valuable commodities. We consumed about three times as much gasoline as diesel in the US last year.

Of course its not put to waste, but the price of both diesel and gasoline is related to the overproduction of gasoline due to demand for diesel. Yes, as mentioned above, it makes sense that it becomes more expensive to try to extract more of one when the "natural" mix doesn't satisfy demand, but I believe there's a limit to how much is economically feasible.

TM

 

[aja8888]

Of course its not put to waste, but the price of both diesel and gasoline is related to the overproduction of gasoline due to demand for diesel. Yes, as mentioned above, it makes sense that it becomes more expensive to try to extract more of one when the "natural" mix doesn't satisfy demand, but I believe there's a limit to how much is economically feasible.
TM

Having worked in the oil and gas industry for 35 years, I can tell you that a lot of product trading goes on internationally with refined products. It all is very situational and price dependent with brokers involved. Refinery shutdowns for turn arounds or unexpected issues can cause a product delivery (through pipelines) disruption, creating a void in their product delivery schedules.

I remember a situation years ago when working at ARCO's Cherry Point refinery in Fernadale, Washington where we we buying Chinese gasoline and taking it into the refinery for blending and then shipment.

U.S. refiners sell a lot of diesel in Europe because of the profit margin. It's all about making money with the producers.

 

[kjclow]

Not sure about the percentages anymore but the US Gulf coast refines the majority of the fuel, both gasoline and distillate, for the world. Many oil tankers bring crude over and take refined fuel back. As mentioned, crude and finished fuels are traded globally. Production is flexed to the most profitable demand. There was talk several years back about setting up the same type of refineries in the Middle East but the cost of putting steel in the ground was too much.

 

[Tin Man]

Uh yes, i know. But the price of diesel went up when ULSD was mandated - more than it cost to produce, some have felt. So the market speaks and speaks loudly which products are in most demand.

TM

 

[aja8888]

Uh yes, i know. But the price of diesel went up when ULSD was mandated - more than it cost to produce, some have felt. So the market speaks and speaks loudly which products are in most demand.

TM

Hard to confirm the cost to produce D2 at the time the lower sulfur mandate was put into effect.

The added costs were new refinery equipment (Sulfur removal units), what to do with all the costly and hard to get rid of sulfur, the costs to dedicate (or construct) new storage tanks, pipeline product separation, dedicated storage in over the road transporting trucks, distribution terminal added costs, etc. All of this varies by supplier.

Wait until the "bell rings" for sulfur removal in gasoline and see what happens.

aja8888

 

[Tin Man]

Hard to confirm the cost to produce D2 at the time the lower sulfur mandate was put into effect.

The added costs were new refinery equipment (Sulfur removal units), what to do with all the costly and hard to get rid of sulfur, the costs to dedicate (or construct) new storage tanks, pipeline product separation, dedicated storage in over the road transporting trucks, distribution terminal added costs, etc. All of this varies by supplier.

Wait until the "bell rings" for sulfur removal in gasoline and see what happens.

aja8888

Yes, you never know until it happens, but the information first published by ASTM at the time ULSD came out was a few cents per gallon. Methinks they didn't account for change in marketability since the rest of the world couldn't use our diesel (except cruise ships etc.) so the US didn't export much if any diesel until then.

TM

 

[nicklockard]

Hard to confirm the cost to produce D2 at the time the lower sulfur mandate was put into effect.

The added costs were new refinery equipment (Sulfur removal units), what to do with all the costly and hard to get rid of sulfur, the costs to dedicate (or construct) new storage tanks, pipeline product separation, dedicated storage in over the road transporting trucks, distribution terminal added costs, etc. All of this varies by supplier.

Wait until the "bell rings" for sulfur removal in gasoline and see what happens.

aja8888

So true. The CAPEX spent to shift to ULSD cannot have been insignificant. Once it's paid off, I hope the price differential will shrink to reflect that, but kinda doubt it.

 

[aja8888]

So true. The CAPEX spent to shift to ULSD cannot have been insignificant. Once it's paid off, I hope the price differential will shrink to reflect that, but kinda doubt it.

Yeah the CAPEX will be paid off but there will be ongoing operational, staffing and maintenance costs that won't go away entirely.

 

[Tin Man]

Its a supply and demand business. Costs certainly matter but are only a starting point in how oil is processed and what its products are worth. That's why there is a future's market for commodities.

 

[kjclow]

The other problem is that the producers have now seen what the consumers are willing to pay. I'm faced with a similar situation at work. Some of our basic raw materials have been inexpensive for decades. Over the last couple of years, the prices have essentially tripled. Partially due to fluctuations in crude, supply outages, and decreased competition. Now the primary producers are just throwing out ridiculous increases just to see what sticks.

 

[ToxicDoc]

The other problem is that the producers have now seen what the consumers are willing to pay. I'm faced with a similar situation at work. Some of our basic raw materials have been inexpensive for decades. Over the last couple of years, the prices have essentially tripled. Partially due to fluctuations in crude, supply outages, and decreased competition. Now the primary producers are just throwing out ridiculous increases just to see what sticks.

Check out the pharmaceutical industry - same issues. Ridiculous increases in generic, off-patent, easy-to-manufacture products. 10-1000x price increases because there is no competition. So now they can jack up the prices as much as they want until a market competitor decides it's worth the investment to spool up a new factory.

 

[Tin Man]

Check out the pharmaceutical industry - same issues. Ridiculous increases in generic, off-patent, easy-to-manufacture products. 10-1000x price increases because there is no competition. So now they can jack up the prices as much as they want until a market competitor decides it's worth the investment to spool up a new factory.

The pharmaceutical industry has another reason: lawsuits. Call 1-800-BAD-DRUG

The FDA requirements are too expensive and onerous, making taking risks a bit thorny billions of dollars later.

Nobody cares so why should they.

 

[ToxicDoc]

The pharmaceutical industry has another reason: lawsuits. Call 1-800-BAD-DRUG

The FDA requirements are too expensive and onerous, making taking risks a bit thorny billions of dollars later.

Nobody cares so why should they.

They've always had their issues, but this a new trick they learned that is now spreading in the industry.

 

[Tin Man]

They've always had their issues, but this a new trick they learned that is now spreading in the industry.

Yes, it seems so.

But the system as well as individuals create such issues. I don't like it either, and I'm sick of the stupid drug commercials...

But the pharmaceutical industry is chicken feed compared to the government's actions that worked strongly to create an impossibly expensive "system"

Lets stick to the topic....

Cheers