Falling Demand for Oil and Gasoline in Japan

[Pablo]

Funny I remember our 5th grade teacher (1968 or so) telling us that diesel should be more expensive than gasoline for the same reason. He was talking to us about carbon chain length and stuff...I was riveted. But currently it's 25% more in USD$. The energy content is not 25% more by far and the actual work gained per mass is barely that, and diesel is only 15% or so net in oil.....

So, my pornt....there are several answers to my question which lead to the answer....of why we need to import gasoline from Japan.

 

[Max_Wander]

all I need is some JDM gas to go with my JDM ride, yo!!

 

[Shannow]

Originally Posted By: Pablo
Funny I remember our 5th grade teacher (1968 or so) telling us that diesel should be more expensive than gasoline for the same reason. He was talking to us about carbon chain length and stuff...I was riveted. But currently it's 25% more in USD$. The energy content is not 25% more by far and the actual work gained per mass is barely that, and diesel is only 15% or so net in oil.....


Got a shock on the way home this arv.

Diesel $1.769/l, and regular $1.469/l ($6.35, and $5.25 US/USGal respectively).

20% cost premium, with 13% premium in energy (35.9 versus 31.8 MJ/L)

 

[JHZR2]

Diesel used to be the less refined product. More energy, yes, so generally on a normalized basis, it is a superior deal... but it doesnt change the fact that it is a less processed product, and had less of a cost associated with it.

Now in the days of ULSD, what happens is that the diesel buyer pays for the capital cost of all those $$$ HDS units required to perform deep desulfurization of the fuel. it is not cheap.

Plus, crudes are benchmarked in a way associated with the processing (i.e. hydrogen, $$$) required to perform such cleanup. Good sweet crudes command a premium because they dont need as much work to meet the ULSD spec, the heavier, nastier ones, need a lot more HDS to clean up... so not only do you have to build the units to accept high-sulfur product, but also spend the hydrogen to perform the HDS reaction.

Nothing is cheap. If we still had 500ppm diesel, it likely would still be on par with gas (other than during heating season, when it usually bumps up). There are other forces at work, first and foremost companies charging to pay for the upgrades they need to make product.

Not sure what grade diesel Australia uses, or if it is the same factors at work. Taxes take such a chunk from the finished, fully burdened price, that sometimes they can make things very unclear.

JMH

 

[jmac]

ULSD was only supposed to add .15 to .20 cents per gal to the price when it started being refined more than 2 years ago. We could probably dig up the quotes from that time from the industry that said just that. All the factors just mentioned were taken into account with that price increase.

 

[JHZR2]

riiiiiight... Like I said, crudes are benchmarked based upon the ease of processing. On a light sweet crude, only so much hydrogen and only so much reactor is needed. On a heavy sour crude, like a venezuelan crude, a lot more hydrogen is necesary... that either comes from cracking more saleable product, or reforming methane. Last I checked, that saleable product and natural gas are not cheap. But that liability still comesback to the fact that an HDS reactor requirement depends on crude input.

Surely the analysts quoted on the worst-case crude, huge HDS and large Hydrogen needs, with NG and oil prices where they are today, right???

There is a difference between long term added costs of processing, and the pay-back of the capital costs to install the equipment in the first place. Even after the equipment is paid for, there is still that cost for the continuous processing. Two different charges...

JMH