Your Reading List

Is demand for diesel fuel about to decline?

All of the hype that swirled around
biofuels a couple of years ago has kind of died down, probably
because little real policy incentive has been created to continue
driving alternative fuels forward. And the federal government has
announced the EcoEnergy Biofuel Subsidy Program will not be renewed
when it expires in 2017, much to the displeasure of the Canadian
biofuel industry. Will that affect oilseed prices? It’s hard to know.

That said, the most interesting

alternative-fuels news now seems to be coming from the most
unexpected places. For instance, Ferrari recently displayed its
gasoline-electric hybrid, the LaFerrari, at the International Geneva
Motor Show in early March. A hybrid Ferrari? That seems like an
unlikely combination of words. But in true Ferrari fashion it is
reported to have 963 horsepower and needs a speedometer with numbers
that go north of 350 KPH to keep the needle from bending.

In all likelihood, you’ll be able to
count the number of hybrid Ferraris traveling North American roads
over the next decade on one hand. So this car won’t make any
significant impact on existing fuel use patterns.

But recently, there has been some
important news relating to a potential spike in the use of natural
gas. In December, Vancouver-based Westport announced its natural gas
engines are now available as original equipment in F-250 through
F-550 Ford trucks. And natural gas engines are now becoming available

in several brands of heavy trucks. There are serious efforts underway
in the trucking industry toward adopting that fuel, albeit for as-yet
restricted uses.

As important as that may be, possibly
the most profound adoption of natural gas use on this continent may
be about to take place elsewhere, and it isn’t even on roads. It
could occur on railway tracks in the U.S. The BNSF Railroad—which
is owned by billionaire Warren Buffett—is set to start trials on
natural gas-powered locomotives this fall. The company’s Chief
Executive is reported to have suggested this could lead to a
wholesale change in fuel use within the railroad industry, similar in
scale to the previous switch from steam to diesel.

The large reserves of natural gas in
North America and improved technology to get at it have caused the
price to fall and made it a potentially reliable and cheap fuel
source. If all railroads begin adopting it, natural gas may take an

enormous bite out of a large market previously dominated by diesel.
Add the increased use of that fuel by the trucking industry to the
mix and the fuel-use picture in Canada and the U.S. begins to look a
lot different than it does now.

Industry experts still don’t see much
if any change in fuel types on farms in the foreseeable future,
though. Diesel is likely to remain king there for a long time. So,
the question all that poses for farmers is this: if natural gas takes
over a sizeable share of what was previously the exclusive domain of
diesel fuel, what if any affect will that have on the future supply
and price of diesel. Will it be good, bad or indifferent when it
comes to price and availability?

We’ve seen intermittent diesel fuel
shortages in the past. Would those end if demand for diesel falls?
Or, would that mean fewer refineries will be cranking out smaller
volumes of diesel and the Western Canada supply would be even more
vulnerable to unexpected disruptions in production? Will the price of
diesel fall because of lower demand, or will it rise because there
may be fewer suppliers?

All things considered, it’s hard to
know what to cheer for.

Scott

About the author

Contributor

Scott Garvey

Scott Garvey is a freelance writer and video producer. He is also the former machinery editor at Grainews.

Comments

explore

Stories from our other publications