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Fuel prices uncertain: ChevronTexaco prez

TAMPA, Fla. - Are you bemoaning the price of diesel at the pump? Don't expect much relief in the near future....

TAMPA, Fla. – Are you bemoaning the price of diesel at the pump? Don’t expect much relief in the near future.

Factors ranging from political instability to a high demand for fuel are adding to the pressures that affect diesel prices, ChevronTexaco Global Lubricants president Mark Nelson told members of the Technology and Maintenance Council in Florida in February.

“We have been through and maybe endured 2004,” he said during his keynote address. “But the forecast is hazy.

“It’s not easy to predict if or when the growth (in demand) and pricing will moderate.”

While the price of fuel at the rack was on the rise last year, it also marked the largest single-year growth in demand since 1978, he said. Initial figures suggest the U.S. required 85 million barrels of oil per day – a decade ahead of levels that were expected in a “doom and gloom” forecast.

Prices will likely remain high in the short term because of a strong demand for diesel, particularly in light of increasing freight volumes, he added. Still, the good news is that the transition to Ultra Low Sulfur Diesel (ULSD) is going according to plan. About 95 per cent of all on-highway fuel in the U.S. will contain a mere 15 parts per million of sulfur by next June, he said. And that’s seen as a key to the introduction of particulate filters that will come in the next generation of diesel engines.

The move to ULSD is “the most challenging transition for fuel suppliers since unleaded gasoline,” Nelson added, noting that the fuel requires as much attention as aviation fuel. If a supply of traditional diesel enters the system, the benefits are lost.

The high injection pressures and closer tolerances in today’s engines make the fuel systems similar to hydraulic systems, he said. “Fuel cleanliness and filtration is absolutely crucial to moving forward.”

The next generation of oils, known as PC-10, will also be compatible with older engines, he added, noting that the new standards can also be met with mineral base stocks instead of synthetic formulas.

Combined with low-sulfur diesel, he suggested it could actually extend today’s drain intervals.

“(But) it’s less clear what the price on the street will be.”

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