WASHINGTON -- It's just a matter of putting a sticker on pumps, but a deadline this week to label diesel pumps as dispensing either low-sulfur diesel (LSD) or ultra-low-sulfur diesel (ULSD) marks the beginning of a transition period that will require retailers to choose offering one of thefuel blends (LSD at not more than 500 parts sulfur per million or ULSD at not more than 15 ppm) or a combination of the two.
Dan Gilligan, president of the Petroleum Marketers Association of America, called the change the real time bomb facing the industry. The way [image-nocss] the current system works is the racks and the terminals can hand it over to marketers at 15 ppm, and we're supposed to load it in our trucks, transport to the retail sites, put it in the retailer tank and have it come out the retailer nozzle at 15 ppm, he told CSP Daily News. We can't do that; we absolutely cannot do it.
Gilligan has petitioned the U.S. Environmental Protection Agency (EPA), encouraging it not to enforce the deadline until the terminals are handing [ULSD product] off to marketers somewhere below 15 ppm to account for possible contamination by additional sulfur during transportation or from the underground storage tank. We have always believed that the terminals would be handing over the product to us at around 12 ppm to give a 3-ppm allowance to the marketer, he said, but that's not the way it's looking.
The specifications are too tight, he added. And unfortunately, retailers, because we're at the end of the pipeline, they hand it off to us and say, Good luck.' It's an enormous problem and we're talking to EPA. I don't know if we're going to have any luck. I hope they understand that this is an impossible situation for us. Ultimately, the issue could result in fuel shortages of one blend or the other.
Brian Milne, editor of dtn MarketWire, a news service that focuses on the wholesale refined fuels markets, agreed that there could be problems, but is more optimistic that those issues will be resolved within the transition period. This is probably the biggest change that [terminal operators have] had to absorb in the history of refined fuel, he told CSP Daily News. It's pretty major effort.
The deadline this Thursday marks the date refiners are required begin posting at least 80% of their diesel fuel at the rack at the ULSD standard. The refining side is definitely in a position to provide this fuel, said Milne.
For retailers, it's the deadline for labeling their diesel pumps as dispensing either LSD or ULSD. Gilligan said he expects most will opt for LSD labeling at least until the October 15 deadline nears. Most retailers will put 500-ppm labels on every diesel pump they have, he said, and they'll keep the 500-ppm label on there until October 15, when the 15-ppm requirement kicks in.
The LSD sticker states: Federal law prohibits use [of this fuel] in model year 2007 and later highway vehicles and engines. Its use may damage these vehicles and engines.
The ULSD sticker states: This fuel is required for use in all model year 2007 and later highway diesel vehicles and engines. Recommended for use in all diesel vehicles and engines.
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