The HESS plant in the Virgin Islands is the largest refinery supplying 80% of US East Coast diesel fuel middle distillate supply, what happens to that after it arrives on shore and is sold is another matter, I have reams and reams of information on this but too much to post here.
Here is another nice spiel on ULSD (ultra low sulphur diesel) so that you begin to get an idea of the difficulty involved coordinating all the refiners that supply the entire nation (that does not include all the middlemen, jobbers, wholesalers, etc.) but it is alot more complex and complicated that what you think as evidenced by the tens of thousands of pages of information on the public record at the USEPA regarding this issue. Please read this and THEN let me know what you think (remember there are about 150 refiners supplying fuel to about 60,000 sellers):
U.S. EPA’s latest twist – proposing to require 80% of U.S. highway diesel production in mid-2006 to be ultra-low-sulfur diesel (ULSD with a 15 ppm sulfur cap) – drives debate as the diesel rule nears finalization, perhaps this week.
In meetings with EPA and the White House Office of Management & Budget (OMB), U.S. Department of Energy (DOE) now counter-proposes a 50% ULSD phase-in, and is getting moral support from the White House Council of Economic Advisors (CEA), which also favors a phase-in of ULSD as a lower-cost pathway.
DOE earlier proposed a 20% initial phase-in, but is telling EPA it would accept a 50% initial phase-in if accompanied by ULSD retail availability requirements and possible economic incentives. EPA and DOE heatedly disagree on cost implications of ULSD phase-ins.
Meantime, a broad coalition of environmental groups, automakers, engine makers, emissions control developers and independent refiner Tosco now urge that the White House and EPA stick to a "fully implemented" ULSD roll-out in 2006, rather than a smaller-scale, lengthier phase-in favored by DOE.
"Any phase-in approach that results in a two-fuel system would jeopardize the environmental benefits of the rule; delay sales of the new cleaner diesel engines; require unnecessary multibillion dollar capital investments by the nation's diesel refiners, transporters and sellers; and
result in a needless burden on the nation's truck operators and 58,000 retail fuel sellers," the letter to President Clinton from the greens/autos/emissions control makers says.
Under the latest EPA proposal, refiners in each of the five regional Petroleum Administration Districts (PADs) in the U.S. would have to
supply 80% ULSD in mid-2006. In practical terms, those refiners choosing to make ULSD would likely switch to 100% ULSD production, then sell sulfur credits to non-ULSD refiners, including refiners in other PADs. Non-ULSD refiners could continue to make today’s 500 ppm sulfur cap highway diesel, and sell it to non-catalyst-equipped highway vehicles for three extra years.
EPA figures that roughly 60 U.S. refineries (about half the U.S. total), representing about 80% of highway diesel volume, would supply the required ULSD.
Those 60 refineries aren’t necessarily just the larger refineries, industry and government analysts agree. While many smaller refineries are seen as facing a tougher cost hurdle to produce ULSD, market factors – such as higher-margin ULSD market opportunities – may entice some of them to play in the ULSD market. Or, some of them may enter toll processing or other cost-sharing schemes with neighboring refiners, to reduce their total cost and capital risk for ULSD.
In the fourth year of EPA’s latest phase-in proposal, refiners who want to continue to play in the highway diesel market would have to make or sell 100% ULSD, rather than today’s conventional diesel fuel. Those quitting the highway market might play instead in the off-highway diesel market unless EPA requires similarly costly sulfur reductions in off-road diesel during this decade.
DOE argues that a smaller and slower ULSD phase-in, possibly combined with certain retail availability requirements, likewise could achieve EPA’s air quality goals, but at lower total cost to consumers, and possibly avoid a ULSD supply/price crisis in mid-2006. As new, fuel-sulfur-sensitive "clean" trucks replace older "dirty" trucks in future years, marketplace demand would gradually drive refiners to replace conventional diesel with ULSD, DOE argues.
‘Price Convergence’ Theory
Similarly, the White House Council of Economic Advisors (CEA) argues
that if refiners produce excess ULSD in the early years of phase-in, then they’ll have to cut prices (and margins) on ULSD to compete with conventional diesel sales. However, they could recoup part of this loss by selling sulfur credits to non-ULSD refiners, CEA figures. These refiners in turn would try to recoup sulfur credit costs by raising prices on
conventional diesel, which would tend to make ULSD and 500 ppm sulfur highway diesel prices converge.
So, CEA’s "price convergence" argument aims to trump EPA arguments and vehicle/engine maker/environmentalist worries that truckers and car owners would wreck sulfur-sensitive emissions control systems by buying cheaper, 500 ppm sulfur diesel fuel during a phase-in. But that argument doesn’t seem to generate much enthusiasm among groups defending EPA’s position.
"Obviously there are legitimate economic reasons why EPA might want to ease requirements for some small refiners – a step that could be taken without subjecting the whole nation to a dual-fuel scheme," Clean Air Trust said in a statement. But the Trust also ripped what it called "faceless bureaucrats" at DOE who are "launching a nasty, behind-the-scenes campaign to disrupt the EPA’s plan to eliminate most of the sulfur from diesel fuel by mid-2006."
Using less inflammatory language, but just as adamant in backing EPA’s 2006 ULSD plan, were several green groups and auto/engine makers in their joint letter to President Clinton.
"Our organizations believe that the only logical approach to making this shift is a single, national fuel containing sulfur capped at 15 ppm, fully implemented in mid-2006," said the letter signed by Natural Resources
Defense Council, U.S. Public Interest Research Group, American Lung
Association, Sierra Club, Clean Air Network, Alliance of Automobile Manufacturers, Tosco, International Truck & Engine, Manufacturers of Emission Controls Association, California Trucking Association,
STAPPA/ALAPCO (state air pollution officials), NESCAUM (Northeast state air pollution officials), BMW, DaimlerChrysler, Fiat, Ford, GM, Isuzu, Mazda, Mitsubishi, Nissan, Porsche, Toyota, Volkswagen and Volvo.
Public Overwhelmingly Favors Diesel Clean-Up
Meantime, American Lung Association released results of a new national survey showing overwhelming public support for dramatically cleaner diesel fuel and emissions standards.
Some 85% of Americans favor requiring diesel vehicles to use the best-available pollution control technology even if it costs more money, the ALA survey found.
A similar ALA poll earlier this year also found strong national support for cleaner diesels, and such support has increased by 10 percentage points since then.
The support cuts across party lines, U.S. geography and demographic groups. More than 80% of Republicans favor tough diesel pollution regulations, along with 87% of independents and 90% of Democrats, the poll shows.
Only 21% of voters said they believed claims made by industry groups
that cleaner diesel fuel could cost 20 cents/gallon more than today’s diesel fuel, the survey found.