A number of factors are coming together that will reduce diesel fuel demand moving forward. As technology improves, vehicles become more efficient and their power sources evolve. Electric vehicles, hybrids and natural gas are all changing the country’s demand for diesel.
Speaking at The NATSO Show in Las Vegas, Nev., Ethan Groveman, manager of project consulting at PIRA Energy Group, said the combination of new technologies and changing fuel prices would affect demand. “When you look at demand patterns, you aren’t looking at diesel fuel in isolation,” he said.
Groveman cited data from a 32-page report,"An Assessment of the Diesel Fuel Market: Demand, Supply, Trade and Key Drivers," developed by the PIRA Energy Group that was commissioned by the Fuels Institute with funding support from the NATSO Foundation. It analyzes domestic diesel fuel demand, production capacity, international demand, trade balances and the various programs and requirements that might affect overall diesel demand.
Groveman said he expects to see biodiesel use increase, along with natural gas and coal- and gas-to-liquid technologies that can produce feedstocks that are derived from something other than crude oil.
“Diesel demand growth is slowing. It is potentially facing competition from natural gas,” Groveman said, adding that the demand for natural gas may slow as diesel prices drop. “We don’t think the oil prices will stay low over the long term, but if oil prices are low for a couple of years, that can mean people who were going to switch to natural gas vehicles may delay that.”
Groveman said that for heavy-duty vehicles, there remains an attractive payback, around two years, on natural gas vehicles. “If diesel were $2.64 then you have no incentive to do this,” he said.
Additionally, Groveman told attendees that over time, off-road diesel demand will decrease, and the number of vehicle miles traveled. The driving distance of people goes down after the age of 65 and among those who are 20-34. “This is very important from a fuel demand perspective. We have a lot of people who will be moving over those two buckets,” Groveman said.
The report is available for download at www.fuelsinstitute.org.
Photo Credit: Chuck Fazio/NATSO
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