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To: Elroy Jetson who wrote (169727)	12/8/2008 1:31:54 PM
From: Peter V	Read Replies (1) \| Respond to of 306849

>>>Refineries which use the gasoline fraction to produce synthetic diesel do not exist, but could be built. But the synthetic diesel would be REALLY expensive, just like the premium for Mobil-1 synthetic oil. I worked for Chevron long enough to understand this. Ask anyone involved in refining.<<< I'm not sure why you keep repeating this. No refinery would do this unless diesel suddenly became incredibly more valuable than any other refinery product. As I stated in my last post, there are limits on what you can output profitably. Due to that you are always going to have a full range of output products, because cracking the last of the heavies to make LPG or other light-end products (or vice-versa) is just too expensive. But just as a sophisticated refinery could take a crude slate with a 20 percent straight-run gasoline fraction and profitably output 60 percent gasoline, a refinery could, if it wanted, run the refinery to output a higher percentage of diesel. And as I also stated previously, the US would take a long time to do this, since all of their hardware is set up to maximize gasoline. They would have to build new hardware to maximize diesel. Distillate use in the US has become a smaller percentage of the mix due in part to the fact that many households have switched from fuel oil heat to natural gas, and on a much smaller basis, diesel cars all but disappeared. Americans drive more cars than anyone else, and virtually all of them run on gasoline, so that's what US refineries produce. Part of the equation is the fact that we use more of our oil for transportation than the rest of the world. The United States and Canada use oil more for transportation than for heat and power, but the opposite pattern holds for most of the rest of the world: most regions use more oil for heat and power than for transportation. Diesel did not used to cost more, when I had the Rabbit it was a couple cents cheaper than gasoline. If Americans began to demand more diesel and less gasoline, US refineries could certainly adapt, although it would take a while before the refineries would be convinced it would be profitable to replace a lot of their expensive gasoline hardware. During that time, diesel would, as you have said, become quite a bit more expensive here due to supply/demand. In fact, that's what is happening in Europe right now, and the pundits are calling on refineries to change their output mix to go from 40 percent mid-distillates to 50 percent. reuters.com Even if you could profitably produce nothing but diesel, diesels will likely never completely replace gasoline cars. Some people will never switch, and certain manufacturers will never produce diesels. Thus, there will always be some gasoline demand. Even in Europe, new diesel cars are only a bit over 50 percent of sales, so gasoline will still be in demand.