Refineries' High Hopes For Diesel Fuel

It may not be apparent to American motorists, but the U.S. oil refinery industry is ailing. Reduced VMT, mandated ethanol use, and escalating vehicle fuel efficiency standards caused a decrease of gasoline consumed. Diesel may revive the industry.

President Obama's new CAFE target of 54.5 miles per gallon by 2025 may not be as ominous as many believe for the refinery industry.

While many auto industry followers believe the high standards will boost sales of hybrids, electric cars, plug-in hybrid vehicles, as well as highly efficient conventional vehicles, many see them as boosting sales of vehicles that run on diesel, as opposed to gasoline, because "diesel engines carry vehicles 25 percent farther per tank than gasoline engines do, according to Hart Energy", an industry consulting and publishing firm.

"Diesel powers about 3 percent of U.S. passenger vehicles, said Allen Schaeffer, executive director of the Diesel Technology Forum, a nonprofit industry organization. Industry consultants expect the CAFE regulations will help push their market share to 8 percent by 2025."

"Still, demand continued to slide for gasoline, U.S. refiners' most popular product. Drivers used less than 378 million gallons of gasoline per day in 2010, according to the U.S. Energy Information Administration. That was down more than 3 percent from 2007, the year industry watchers mark as the peak for gasoline consumption."

"Many believe we'll never reach those levels again," said one oil analyst.

Thanks to Susan Frank

Full Story: Diesel could fuel refinery comeback

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