Contribution - Allen Schaeffer | Engine Tech Forum

By all accounts, the year ahead promises more of the same; an off-balance economy tipping toward the recessionary zone, with lingering labor and supply chain issues and dynamic energy markets.

Auto-market: Drive a Diesel in 2023

Annual auto sales in the US in 2022 were down 8.6% due to continuing supply problems, and most recently headwinds due to higher interest rates as well as a slowing of automotive demand. They will end the year at about 13.8 million, which is the lowest rate since 2011 as the economy recovered from the Great Recession. Consumers have more efficient vehicle choices than ever before, with manufacturers offering a growing array of full electric vehicles including in pickup trucks, cars, and SUVs along with a few fuel cell vehicles and a host of plug-in hybrids, as well as those powered by conventional internal combustion engines like gasoline and diesel. EV sales in 2022 were 5.9% of all vehicles for the entire year, up from 3.3% for all of 2021. The diversity in fuel options and vehicle technology choices today compared to a decade ago seems mind numbing, making it clear that at least for the moment, we are not a one-size-fits all world when it comes to our vehicles.

Looking at diesels, for 2022, these vehicles represent 1.3% of total sales as compared to 1.2% in 2021. For 2023 there are 32 options for diesel engines in vans, pickup trucks and SUVs available in the US. In the advanced diesel vehicle category, last year’s sales in this country were led by the Mercedes Sprinter Van followed by three pickups: the Chevy Silverado, GMC Sierra, the Ram 1500 Pickup, and the Ford Transit van.

Commercial diesel models classified as Class 2 & 3 vehicles (over 8,500 lbs. gross vehicle weight rating), are series 2500 and 3500 heavy-duty pickup trucks. Sales of these commercial diesels represented an estimated 3.5% of total sales in 2022, up from 3.2% in 2021, as the overall declining vehicle market enabled a greater share with similar sales volumes.

This year, General Motors will debut a new diesel engine (Duramax 3.0L Inline six-cylinder model LZ0) in the Chevrolet Silverado 1500 pickup truck. GM’s diesels include those rated by the U.S. EPA at 29 mpg city, with some models having a driving range of 756 miles on a single tank of fuel. No range anxiety here!

Diesel drivers have choices about fueling their vehicles. All diesel models available today are certified by manufacturers as capable of using B20 fuels – (20% biodiesel/80% ultra-low sulfur petroleum diesel). According to the U.S. Department of Energy Alternative Fuels Data center there are more than 800 retail stations selling biodiesel across the country.

Diesel Fuel Prices: Settling Down?

Petroleum supplies and pricing - particularly distillate fuels like diesel - were in high global demand and substantially impacted by the Russian war against Ukraine in 2022, seeing the highest price at the pump ever recorded. Current diesel prices are running at $4.549 (national) to$5.08 a gallon (West Coast), up 89 cents from last year.

Recent studies by the Clean Fuels Alliance America showed that the US production of biodiesel and renewable diesel consistently reduces distillate fuel prices by increasing the supply. As the production and availability of cleaner, better fuels grew over the last decade, the price impact increased to a 4% benefit in 2020 and 2021, keeping diesel fuel prices lower at the pump.

Looking ahead to the rest of 2023, the Energy Information Administration’s (EIA) Short Term Energy Outlook forecasts that global oil inventories will fall slightly in the first half of the year, before rising by almost 0.7 million barrels per day in the second half. The EIA’s forecast envisions global oil inventories higher at the end of 2023 than earlier predictions, leaving crude projections for $92 per barrel in 2023, which is$3/barrel less than forecasted in December 2022.

The EIA projects our nation’s refinery utilization will remain near its five-year average through 2023. It expects the combination of a slight contraction in the economy and refinery maximization of distillate fuel production will reduce distillate prices in the next five months. The EIA also forecasts US diesel refining margins will fall by 19% this year compared with last year. However, the EU’s ban on seaborne imports of petroleum products from Russia creates supply and price uncertainty for distillate markets in early 2023.

Renewable Biodiesel Fuels

The role of renewable biodiesel fuels is growing, as a key strategy to help decarbonize the transportation sector. Necessary to achieve that is more investment in feedstocks and refining capacity to produce the high-quality renewable diesel fuels. The global renewable diesel market by production has reached 2.61 billion gallons in 2021. The market is expected to reach 7.45 billion gallons per year by 2027.

According to the EIA, biodiesel production averaged about 0.123 million barrels per day in 2022 and is expected to expand to 0.128 million barrels per day in 2023. Biodiesel net imports are expected to average 0.003 million barrels per day in 2022 and 2023, up from 0.001 million barrels per day in 2021. The EIA also forecasts that at the end of 2022, more renewable diesel fuel would be produced than conventional biodiesel fuels. Using the same feedstocks, biodiesel and renewable diesel are processed in different ways, resulting in renewable diesel fuel – sometimes referred to as hydrogenated vegetable oil or HVO – having key properties essentially identical to petroleum diesel fuel, making it a drop-in replacement at any blend percentage. Depending on feedstocks, using advanced renewable biodiesel fuels instead of petroleum-based fuels lowers greenhouse gas (GHG) emissions by anywhere from 50 to 85%, along with reductions in other emissions like particulates as well.

In Conclusion

No one knows exactly where this year will take us, but at this moment it feels like flashing yellow lights at a busy intersection. Will supply chain pressures finally ease? Will a new COVID-19 variant upend the global workforce? What happens in the Russia Ukraine war? If there is a recession, how long will it last and how bad will it be? When will retail fuel prices come back to earth? Will automakers’ bets on EVs pan out? What is the future for internal combustion engines and sustainable fuels as a key climate strategy?

That’s why in 2023 maybe the best advice comes from the airline industry: “Even if the captain has turned off the seatbelt sign, we recommend you keep your seat belt fastened at all times. We can’t always know when turbulence is coming.”

Original Article : Engine Tech Forum, Jan 2023. Link: https://enginetechforum.org/policy-insider-blog/posts/the-year-ahead-whats-in-store-for-consumer-diesel-vehicles-and-diesel-fuel-prices