12.07.15 Monday
Diesel Production for Tomorrow’s Vehicles
By: P. A. (Andy) Weber III

It seems that every week there is new news about the rise or fall of diesel demand. As far as U.S. demand goes, diesel is not as popular as it is in other countries. A very small percentage of light duty vehicles (LDVs) use diesel compared to countries where diesel is more popular; however, diesel engines are on the rise in the U.S.

U.S. refineries are not suffering a lack of demand for diesel, however. In fact, Valero, Shell, and Marathon Petroleum are all expanding their diesel refining facilities and export terminals to maximize their ability to meet the demand on the Gulf Coast.

Why does the U.S. Consumer shy away from diesel? Most of the aversion is due to the history of diesel engines being louder and dirtier than regular gas engines. There are conflicting theories about the environmental impact of diesel vs. gasoline, mainly boiling down to the fact that they both generate pollutants, but different ones. It has not been determined whether pollutants from one or the other are actually better or worse for the environment.

The U.S. aversion to diesel is mostly a public perception issue. Indeed, Volkswagen’s recent scandal did nothing to help the argument for bringing more diesel engines to the U.S. The fact that they lied about the emissions of their engines makes it seem like diesel engines have something to hide. Can diesel engines meet emissions requirements? Are the emissions requirements founded on accurate data?

It is interesting to note that though passenger vehicles in the U.S. are primarily non-diesel, the U.S. still uses 6 times more diesel than Germany, where diesel engines are common. This is mainly because of the size difference of the countries, and the fact that the U.S. has so many large vehicles that operate on diesel. Since truckers have farther to travel, they use more fuel.

For producers, diesel is currently more profitable than gasoline. As of mid-year 2015, margins on U.S. Gulf Coast-produced diesel were running just above $16 barrel, while the margins on finished gasoline were much lower at just under $8 barrel.

Though U.S. diesel demand is not growing at a huge rate, international demand is. Combine that with the fact that gasoline demand is going down as consumers find more fuel-efficient vehicles and alternative energy options, and it makes sense that the big producers are maximizing on diesel while they can.

<< back to blog
“Corner Capital demonstrated patience and persistence in our negotiations over a year’s time, solving a complex structuring project. The end result was a tremendous amount of value and a great long-term relationship.”
-Rene Anabi, Anabi Holdings North Master, LLC
“Corner Capital successfully negotiated and facilitated my refi project and helped me find additional capital to support my ongoing growth plans. They managed all aspects of the project very well and I would not hesitate to use them again or to recommend them to other marketers.”
-Carlos Garza, La Lomita
“The folks at Corner Capital demonstrated great leadership and industry knowledge managing our financing requests. I was able to consolidate my debt structure, reduce costs, and create capacity to meet our growth needs. I’ve recommended them to my peers and my customers.”
-Jeffrey Magness, Magness Oil Company
“Brookshire Brothers utilized Corner Capital Advisors for valuation and structured sale of 26 of our convenience stores. Corner Capital’s knowledge of the industry and attention to our assets was critical to our successful closing. We relied on their services and expertise for the entire process.”
-Jerry Johnson, President and CEO – Brookshire Brothers, LTD
“Lard Oil recently engaged Corner Capital Advisors on two projects, first to assist in an acquisition opportunity and the other to manage the process to refinance our Sr. term and revolver facilities. The CCA team brought a wealth of knowledge and expertise and did so under our strict timelines and expectations. I have no reservations of recommending their firm and intend to engage with them as other opportunities present themselves.”
-Johnny Milazzo, President and CEO – Lard Oil Co., Denham Springs, LA
“Corner Capital helped me with a complex transition of our convenience retail business in 2013, which was a critical component of our succession planning. We were so pleased with their industry knowledge and structuring expertise that we engaged them again to assist us in the transition of our wholesale fuel supply business.”
-Ed Few, Jasper Oil Company
“Under time and financial pressure, Andy was able to quickly grasp not only the operating issues with Appco, but weave through the difficult negotiations with landlords, suppliers, and creditors while ensuring the majority of the employees were taken care of throughout the process. I’d highly recommend Corner Capital’s services for any distressed situation, in any part of the country.”
- Mark Dessauer, Counsel for Appco
“Andy Weber and his team at Corner Capital have done exceptional work supporting transactional, valuation, and various proprietary initiatives at our companies. Andy’s extensive industry experience, technical competence, and practical "real world" approach is a valued resource to our organization. The Corner Capital team consistently delivers-----and always in a most timely and impactful manner.”
-M.J. Castelo, Managing Member & President – Andretti Petroleum LLC / Peninsula Petroleum LLC / Humboldt Petroleum Inc.