FHWA Talking Freight Seminar Series: Energy Issues and the Impacts on Freight Transportation

FHWA Talking Freight Seminar Series:Energy Issues and the Impacts on Freight TransportationEnergy Issues and the Impacts on Freight Transportation

Richard MoskowitzAmerican Trucking Associations

May 17, 2006

Background Fuel Issues• Diesel is Essential to

Trucking

• Trucking industry consumes 36.4 billion gallons of diesel

• Fuel is typically the 2nd largest expense (20-25%)

Trucking 36.4

(65% )Air 13.0

Water 2.2Rail 3.8

The Price of Diesel Fuel

• 2006 $98.3 billion

$52.2

$65.9

$87.7

$98.3

$44.7

$40

$50

$60

$70

$80

$90

$100

2002 2003 2004 2005 2006

$0.90$1.10$1.30$1.50$1.70$1.90$2.10$2.30$2.50$2.70$2.90$3.10$3.30

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Sources: A.G. Edwards & ATASources: A.G. Edwards & ATA

250

450

650

850

1,050

1,250

Q1

90

Q1

91

Q1

92

Q1

93

Q1

94

Q1

95

Q1

96

Q1

97

Q1

98

Q1

99

Q1

00

Q1

01

Q1

02

Q1

03

Q1

04

Q1

05

$0.90$1.10$1.30$1.50$1.70$1.90$2.10$2.30$2.50

Trucking Failures National Avg. Price of Diesel Fuel

Trucking Failures vs. the Price of Diesel FuelTrucking Failures vs. the Price of Diesel Fuel

Failures only includes fleets Failures only includes fleets with at least five truckswith at least five trucks

Transition to ULSD

• 2006 Highway diesel fuel sulfur cap of 15 ppm

• What exactly is 15 ppm S ?

Why ULSD?• Enables use of advanced emission

control technology (2007)– PM Traps– EGR

• Clean Air is not free– Cost of new engines– Fuel Economy– Maintenance Costs– Engine Life (?)

X

ULSD – Refinery/Production Status

• 2005 Precompliance Report (90% ULSD)

• ULSD Dominant Fuel across all PADDs

Will ULSD be Available Everywhere?

• Potential for Product Contamination– Gasoline < 80 ppm – Jet Fuel < 3,000 ppm– Heating Oil < 5,000 ppm

• Handoffs (add 1 ppm)

• End of the Pipeline Issues

• Localized shortages could cause dramatic price spikes

Will ULSD Cost More than Conventional Diesel Fuel?

• ULSD will Cost More– EPA estimates 5 cents– Distribution costs– Dedicated tank trucks?

• Difference between cost and price

• Energy Content

Will ULSD Affect Performance ?

• ULSD energy content

• Lubricity (Additives / B2)

• Solvent Effect

• Consequences of misfueling (?)

Tank Truck Concerns

• Ensuring Product Integrity• Liability for Product Contamination• Sulfur Testing Concerns• Switchloading• Static

Potential Supply Disruptions

Catch 22 solutions

Questions

Richard MoskowitzAmerican Trucking Associations

rmoskowitz@trucking.org