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SACREMENTO, Calif. -- California was the first state in the nation to start pumping a new formula of diesel -- ultra-low sulfur diesel (ULSD) -- that will be better for the environment, despite concerns that the price will affect transportation companies, and in turn, the entire nation.
Last week -- and six weeks ahead of the rest of the nation -- California introduced ULSD at pumps. The fuel is practically free of sulfur -- the corrosive substance that harms an engine's pollution control equipment -- at 15 parts per million from the 150 allowed in California and the 500 parts per million for the rest of the nation. According to the report in the Los Angeles Times air quality regulators state that this reduction is just as significant as the elimination of lead from fuels 25 years ago.
"It's a really big deal," Jerry Martin, spokesman for the California Air Resources Board, told the LA Times. "In 2000, we said we wanted to reduce diesel pollution by 75 percent by 2020. We can't get there without this fuel."
Nationwide, the Environmental Protection Agency required refineries to begin the switch of 80 percent of their diesel production to ULSD on June 1.
California fuel pumps began selling ULSD last Friday for all on- and off-road diesel engines. The reminder of the country will follow with regulations by Oct. 15 for all on-road vehicles, and 2010 for all off-road vehicles, including locomotives and marine engines.
But what is good for some is not good for all. The price of the new fuel is estimated to be four to five cents higher than traditional diesel, leaving companies that rely on diesel -- such as trucking and other transportation companies -- pinching profits. The Times reported that if those high costs are too much, trucking companies and the products they deliver might have to raise prices to compensate.
Diesel car drivers, who use the fuel to fill their tanks, will directly suffer with the new fuel's higher prices. Carmakers, on the other hand, are embracing the fuel. Ford has announced that as early as 2008, its Super Duty F-Series would have a compatible engine to run on the ULSD.
The refining industry has dropped $8 billion to make preparations for the switch to ULSD, and the fuel costs more to produce than traditional diesel, reported the newspaper.
Other concerns surround the availability of the diesel fuel. California alone consumes an estimated 3 billion gallons of diesel fuel a year. "The real question is about the supply. Is there enough of it in the pipeline to have a continuous flow of fuel or are we going to have those continual price spikes?" Patty Senecal, vice president of Transport Express Inc., told the Times. "Even a few pennies will make us go ballistic, and we’ll have to pass those costs on."
Other concerns revolve around the transition between the old and new diesel. "It won’t be a big deal in California," Tom Kloza, chief oil analyst for the Oil Price Information Service, told the newspaper. "For the rest of the country, taking it down from 500 to 15 [parts per million], they'll have to do the old enema purge. Sometimes you have to run the storage tanks down to empty and clean them. It just takes a few gallons of the old stuff to screw up the mix."