Article

Fuel: The Double Whammy

We explore the ramifications of government regulations, market-driven cost increases, the future of biodiesel and liquid natural gas, as well as anti-idling solutions.

June 2006, TruckingInfo.com - Cover Story

by LCT Staff

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Diesel price hikes are never welcome, but the latest increases come at a particularly bad time. On top of market-driven run-ups that have pushed prices to near-record levels, fleets can expect to be hit with at least a nickel a gallon increase this month as ultra low sulfur diesel comes on line.

It's a double whammy delivered in part by the cost of government regulation but mainly by the hard reality of an oil market in which there is practically no give. Burgeoning global demand, maxed-out refining capacity and political instability in major oil-supply nations are relentlessly lifting costs.

Prices fluctuate within a range, and the range has been trending upward – although, truth be told, no one really knows which way the range will go.

"I would much rather forecast anything than fuel prices," says Bob Costello, vice president and chief economist at the American Trucking Associations. "Even oil industry experts are widely divergent."

If he had to bet, though, he'd bet that the direction this year is up. The U.S. Department of Energy's Energy Information Administration agrees, although it does not expect to see the same kind of price spike this fall that occurred last year after Hurricanes Katrina and Rita knocked Gulf Coast refineries for a loop.

Trucking has been forced to adapt to rising fuel prices – the second highest expense in the business, after labor. The industry is on pace to spend more than $98 billion on fuel in 2006, according to ATA. That's $10.6 billion more than last year, which was itself a record high.

Analysts claim there was a time when the situation was actually worse – at least in a macroeconomic sense. In the early 1980s the country was spending more than 13 percent of its gross domestic product on energy, compared to less than 7 percent in 2001, the latest year for which figures are available. It's a statistic that is useful for gauging the impact of fuel prices on total economic activity, but it is of little use in helping carriers deal with today's reality.

That reality is shaped by forces that are beyond the control of any industry – or government, for that matter. The single biggest expense in a gallon of diesel (52 percent) is the cost of crude oil – a price that is set by global demand. In response to strong demand from newcomers to the world industrial scene, such as China and India, the price of crude oil rose about 33 percent in the last year. Another factor influencing the price of crude is concern that politics or war will disrupt the flow of oil from such important supply nations as Nigeria and Iraq.

The second-biggest expense in a gallon of diesel is refining. At the moment, that cost is particularly high because refineries are catching up on the maintenance they postponed in the crunch to get fuel moving again after last year's hurricane season. That's a short-term issue that is exacerbated by an underlying global problem: The EIA reports that global demand is growing faster than refinery capacity.

In the United States, says ATA's Costello, refineries are running at 90 percent capacity, which is basically the maximum. "There is no slack in the system," he says, which means that any disruption will drive prices up.

So it's no help that refiners are in the midst of a changeover to ultra low sulfur diesel. The Environmental Protection Agency is requiring refiners to start delivering diesel with no more than 15 parts per million of sulfur – compared to current levels of 500 ppm – by June 1, and for 80 percent of fuel sold at retail to be 15 ppm by Oct. 15. They must reach 100 percent when EPA's next emissions rule takes effect in 2010.

Exact figures are hard to come by, but ATA is figuring there will be at least a 5-cent-per-gallon premium for the fuel. And that does not take into account the reduced energy content in ULSD: "We'll need to burn essentially 1 percent more fuel to do the same amount of work as today's fuel," says ATA Assistant General Counsel Rich Moskowitz.

Engine and truck builders have said they expect their new engines to be more fuel efficient in equal proportion to the energy loss, but there will be additional new expenses associated with these engines – such as maintenance for emissions filtering gear. And pre- 2007 engines running on ULSD will lose some efficiency.

REMEDIES

So what can be done? On a global scale, not much, other than continue to resist the forces that are creating instability in oil supplying nations such as Nigeria and Iraq. The demand side is likely to remain strong as China and India continue to grow. China, for instance, has more than quadrupled its gross domestic product in less than 30 years. It is the world's sixth-largest economy and recently passed Japan to become the world's second-largest petroleum consumer. Its oil consumption is expected to triple by 2020.

In the United States, there are few short-term options. It is a measure of the nation's anxiety and frustration that Congress has flirted with a variety of federal give-backs to ease the pain of high prices. One proposal, branded as "insulting" by House Majority Leader John Boehner (R-Ohio), would have given each taxpayer a $100 rebate. Congress quickly walked away from that idea, although other similar measures – a $500 income tax credit, for example – are still listed in the roster of bills. Another notion that's been floated and shot down is suspension of the federal fuel tax.

Some relief may show up from President Bush's decision to suspend deposits of oil into the Strategic Petroleum Reserve – a reversal of his position on the issue last year. The move was intended to ease supply pressure and lower prices, and according to Costello will have some positive impact on the market. "We thought it was a welcome move," he says.

Whenever prices go up, there calls to open the SPR – some 690 million barrels of crude oil stored in underground caverns. The rules say the President must determine that there is a "severe energy supply interruption" before he can tap the reserve. Bush has declined to make that determination, arguing that it would not be wise in a time of war.

Congress came close last year to authorizing exploratory drilling for oil in the Arctic National Wildlife Refuge. But the rejection of that measure after bitter debate indicates that relief is not likely from that quarter any time soon.

Longer term, it may be possible to help the oil industry increase its refining capacity by easing restrictions on expanding existing refineries and building new ones. The House has legislation designed to speed up the permit process and encourage construction of new refineries.

Congress also is considering legislation designed to rein in the states' appetite for special diesel formulations. These "boutique" fuels, as they are called, complicate the distribution system and drive up regional prices, explains ATA's Moskowitz.

"Boutique fuels can only be produced by a handful of refineries," he says. They cost more to produce and distribute, and they make it hard for suppliers to balance regional shortages. California diesel, for example, costs up to 5 cents more a gallon to produce than the fuel that is used in neighboring states.

ATA has been pressing for a national fuel standard for years, but it's not an easy sell on Capitol Hill, Moskowitz says. "You're talking about preempting states' rights."

The legislation now in play on the Hill would create an "acceptable" list of fuels, but because it exempts some additives, it would not solve the trucking industry's problem, he says.

In addition, the Environmental Protection Agency recently announced it was launching a task force to review boutique fuels. "I fear their focus is going to be on gasoline," Moskowitz says, "but ATA will be reaching out to EPA and state governors to make sure this task force focuses on diesel as well as gasoline."

FUEL SURCHARGES

At the industry level, surcharges are the standard response to rapid jumps in fuel prices – not just in trucking but in most industries. Truck lines are generally successful in passing on a portion of sudden, steep price increases to shippers through surcharges, says ATA's Costello.

Owner-operators, too, use surcharges to recoup a portion of their costs. The Owner-Operator Independent Drivers Association has a model surcharge contract on its web site (www.ooida.com).

However, Todd Spencer, executive vice president of OOIDA, says owner-operators continue to struggle with a shortcoming in the surcharge system: The shipper pays the surcharge, but sometimes the middleman does not pass all of that money through to the operator.

OOIDA has for years sought a legislative remedy to this problem, pushing bills that would create a mandatory surcharge for truckload carriers.

But Congress made it clear last year that it does not want to take this approach. A surcharge provision was stripped from the highway reauthorization bill before it became law.

Spencer says OOIDA is not really pursuing the issue any more. "The people on the other side have pretty much poisoned the water for that kind of legislative relief," he says.

Opposition to the surcharge measure came from the shipping community and truck lines (typically LTL companies) that prefer to let the market handle surcharge arrangements, rather than rely on government regulation.

From where Costello sits, surcharges are necessary, but these spikes in fuel prices hurt whether there's a surcharge or not. "Everybody is paying for this one way or another," he says. "It takes money out of the economy."

MODEL IDLING LAW

As fuel prices have risen, so has interest in anti-idling measures (see the accompanying anti-idling solutions story). Another factor driving interest in anti-idling measures is a patchwork of laws limiting truck idling. Right now, some 15 states and many local communities have laws that restrict truck idling. These laws are not consistent – the limits range from absolutely no idling to 15 minutes, with varying conditions and fines. Carriers have complained that it is impractical for drivers to comply with such disparate requirements.

The EPA has come up with something that may help. Working through its Smartway Transport Partnership, a coalition that includes truck lines and trucking interest groups, EPA came up with a model anti-idling law that is intended to foster compliance and recognize the interests of both truck lines and communities.

The model, intended to be a guideline for states and localities that want to limit idling, proposes that trucks be limited to 30 minutes of idling while waiting to load or unload, and five minutes of idling (for warm-up or pre-trip inspection) in any one-hour period, with exceptions for traffic tie-ups, emergency or safety concerns, maintenance, safety inspections or power take-off operations.

The 30-minute limit would not kick in until five years after a state has implemented a financial assistance program for idle reduction. The same would apply to the five-minute limit for sleeper cabs during rest or sleep breaks.

The aim is to create "mutual responsibility" for the carrier, the operator of a warehouse, store or other facility, and the state. The facility operator could, for example, speed up his cargo handling or offer a comfortable waiting area for drivers.

The model says: "The trucking industry would evaluate, select and purchase an idle reduction technology; and the state would assist the trucking industry with the purchase by creating a financial loan program, such as those that currently exist in Minnesota, Arkansas, Pennsylvania and Oregon."

Another exception would cover circumstances, such as mechanical difficulties, over which the driver has no control.

The model also recommends penalties: a warning upon first offense for the driver or the facility owner; a $150 citation for the driver and a $500 citation to the truck and facility owner for all subsequent offenses.

EPA is offering the model (it can be viewed at www.epa.gov/smartway/idle-state.htm) as a guideline to the states. The agency said it does not intend to issue any regulations on idling.

ULTRA LOW SULFUR

Much has been written about the 2007 engines, but there's a crucial part of the equation hitting pipelines this month – ultra low sulfur diesel fuel.

By Oct. 15, most of the on-highway fuel available will be ULSD, with 15 parts per million maximum of sulfur. (The "low-sulfur" diesel fuel we've been using contains up to 500 ppm of sulfur.) The new fuel was mandated by the U.S. Environmental Protection Agency in conjunction with the 2007 heavy-duty diesel engine emissions standards. To obtain the mandated 90-percent reduction in particulate matter emissions, engine makers must use aftertreatment particulate filters – and those filters don't like sulfur.

"It's very important to realize there's a synergy between the [emissions] technology and the fuel," says Jens Mueller-Belau, technology manager for Shell.

The switch is comparable to the switch to unleaded gasoline in the early 1970s, explains Joe Koenig, spokesman for International Truck and Engine. "The performance and life of catalytic converters on passenger cars were poisoned by lead in gasoline, so we took the lead out of gasoline. In a similar manner, sulfur – which is a naturally occurring element in most crude stock – acts as a poison to the performance and life of diesel catalysts. To make the emissions system last the life of the truck, we absolutely had to have much lower levels of sulfur in diesel fuel."

There are plenty of questions and concerns about the new fuel, including issues related to performance, supply and price. While some questions will only be answered for certain as the transition progresses, we've come up with as many answers as we can.

THE PHASE-IN

The ULSD requirement is being phased in. As of June 1, at least 80 percent of the diesel fuel refined or imported into this country must be ultra low sulfur.

In reality, that number will be even higher, says Mueller-Belau. "The latest expectation from several sources is that the market will be more like 90/10 – a little more than 90 percent will be ultra low sulfur diesel from Day One."

Large refinery operations such as Shell are switching to 100 percent ULSD for on-road fuel. Some small refineries may continue to make low-sulfur (500 ppm) diesel – some under a small-refinery exemption that allows them to delay conversion to ULSD, and some by using a sulfur credit trading program, where they buy ULSD "credits" from refineries that are producing 100 percent ULSD, explains ATA's Rich Moskowitz.

The next part of the phase-in happens Sept. 1, when terminals will be required to switch to ultra-low sulfur diesel. By Oct. 15, at least 80 percent of a refiner's on road diesel fuel sold at retail sites must meet the 15 ppm standard. California has slightly stricter regulations, calling for ULSD at retail sites by Sept. 1.

Federal regulations require the labeling of all diesel fuel pumps to specify the type of fuel dispensed by each pump.

Although ULSD will be the dominant on-highway diesel fuel produced, EPA does not require service stations and truckstops to sell ULSD fuel. So if you have a 2006 or earlier vehicle and would prefer to use the higher sulfur fuel, you can – assuming you can find it. In California, which has slightly more restrictive regulations, ultra low sulfur diesel will be the only on-highway fuel available. After Dec. 1, 2010, only ULSD will be available for highway use by law.

If you have a 2007 model or later vehicle, you'll have no choice but to use ULSD. Using higher-sulfur diesel will reduce the efficiency and durability of engines, permanently damage emissions control systems, reduce fuel economy, and possibly keep the vehicle from running at all, according to the Clean Diesel Fuel Alliance. Manufacturer warranties are likely to be voided by improper fuel use. It's also illegal and punishable with civil penalties.

SUPPLY ISSUES

ULSD fuel costs more to refine and distribute – an estimated 5 cents per gallon – but it's impossible to predict the price at the pump. As noted earlier, many factors affect the pump price. ULSD prices initially could be higher than the 5-cent estimate, especially in certain areas, because of supply and contamination issues.

"As you go farther away from the refinery and [there are] more handoffs between pipelines and terminals, you increase the potential for contamination," says Moskowitz. In fact, a document for terminal operators from dtn, a company that provides real-time market, news and weather information services to energy trading markets, notes, "Despite all measures to ensure the integrity of the sulfur content of ULSD, contamination will occur."

Moskowitz explains that anyone who takes possession of the fuel downstream from the refiner, whether it's a terminal or a fleet, is allowed to "downgrade" contaminated ULSD to low-sulfur diesel (up to 20 percent of the fuel they handle on an annual basis).

"I think in many parts of the country there will only be ultra low sulfur diesel fuel available, but there will be parts of the country where both grades are available, and may be some parts of the country were ULSD is unavailable," Moskowitz says. "But it's impossible to predict where those locations may be and for how long the fuel will not be available, if that happens at all."

New England, Chicago, Atlanta, and areas in PADD 4 (the Mountain region) are among the areas that will bear the most watching for possible shortages, according to the Oil Price Information Service.

Shell's Mueller-Belau says while it is true that there is the potential for ULSD to become contaminated with higher levels of sulfur, "the reason for the phasing from the refineries, terminal and then retail sites, is to overcome that issue."

In addition, he says, refineries are making diesel with even lower sulfur levels than the 15 ppm allowed at the pump. "You have to plan for certain levels of contamination in the distribution system," he says. "Our production target is well below 10 ppm out of the refinery."

How do you know you're getting the real thing? Civil penalties of up to $32,500 per violation per day can be assessed for non-compliance with EPA's ULSD fuel standards, or for misrepresentation of the sulfur level of diesel fuel.

Overall, the petroleum industry has invested $8 billion for changing production to ultra low sulfur diesel products, says Mueller- Belau.

PERFORMANCE ISSUES

Ultra low sulfur diesel has a 1 percent lower energy value, according to current estimates. How that will play out in actual fuel mileage is tough to say.

"On a per-truck basis, that would be very difficult to measure, because the truck's duty cycle is likely to change and other factors influence fuel economy," Moskowitz says. "If you're running a fleet of thousands of vehicles, you will be able to measure the difference in fuel economy."

International's Koenig points out that fuel economy test methods typically have an error margin of plus or minus 2 percent, "so assessing fuel economy degradation from the fuel alone would be very difficult."

In many cases, truck and engine makers say they've been able to offset potential fuel economy losses with the new trucks and engines, thanks to better aerodynamics and more efficient combustion.

Koenig says one of International's goals in designing 2007 engines and chassis was "fuel economy neutrality – that is, offset a 1 percent loss of energy from the ULSD fuel through the design of our engines and trucks."

Caterpillar says it has so far been successful in its goal to maintain current fuel economy or improve it, says spokesman Jason Phelps. "Caterpillar 2007 Heavy Duty C13 and C15 engines are maintaining the fuel economy of current models, and the 2007 Caterpillar C7 and C9 have shown a 2 to 4 percent improvement."

Cummins points out that there are ways customers can help offset any fuel economy difference in the spec'ing process. "By working closely with customers, Cummins is learning the value of proper gearing specifications, configuring the ECM's electronic features and parameters to maximize fuel economy, reducing idle and maximizing time in top gear," says Cummins spokeswoman Cyndi Nigh. "We believe the above practices will offset the loss due to ULSD efficiency."

Ultra low sulfur diesel also raises some questions about lubricity, because sulfur is a lubricating ingredient in fuel. Fuel companies are well aware of the issue and will be using additives at the terminal to make sure ULSD performs as specified by a new ASTM standard that governs the lubricity of diesel fuel.

"I know there's a consumer concern about lubricity," says Mueller-Belau. "We [have been doing] fuel development for 100 years, and we do have solutions for these technical issues. The issues are real, but we know what to do so the consumer will not have any problems in the fuel."

If you buy a quality, branded product, you shouldn't have to worry about putting in additional fuel additives for lubricity.

It's not like ultra low sulfur diesel is new. Diesel fuels with very low sulfur levels are already in use in Europe, and California has been encouraging their use for some time, so the petroleum industry already has experience with lubricity and other potential problems. BP, for example, has been selling a branded ULSD called ECD, or Emissions Control Diesel, for six years.

OLDER ENGINES

While ULSD is expected to be fully compatible with the existing fleet of pre-2007 vehicles, there are some potential problems, including a reduction in fuel economy, fuel system leaks and premature fuel filter plugging.

In an August 2005 technical bulletin, Chevron Products Co. noted that some vehicle owners who recently began using ultra low sulfur diesel had reported fuel leaks. Similar occurrences were reported in the early 1990s when the 500-ppm low sulfur diesel was introduced.

Chevron expects these failures to be sporadic. "Seals in some vehicles may fail, while similar seals in other vehicles using the same fuel may not," says the report. "Past experience indicates that the common denominator is expected to be nitrile rubber seals that have seen long service at high temperatures."

Reductions in sulfur content or lubricity aren't the problem, Chevron says. Company officials believe the problem is most likely caused by lower levels of aromatics, which can cause seals to shrink. Aged seals, which don't have the elasticity to adapt to this change, appear to fail sooner.

"The recurrence of these fuel leaks could become widespread geographically when the majority of fuel supplies are switched to S15," says the

Chevron paper. "However, it is anticipated that only a very small fraction of the vehicles may be affected. Of course it can be serious for owners whose vehicles are affected." Chevron recommends if you have a fuel leakage problem, or are concerned about the possibility, that you talk to your engine manufacturer.

Another potential issue with older engines, Moskowitz says, is that ULSD may act as a solvent and actually clean out the fuel system. "So if over time an older truck has accumulated sediment in its fuel system, which is a naturally occurring process, using ULSD may free up that sediment and necessitate the need to change the truck's fuel filter ahead of its regularly scheduled maintenance."

That's not a certainty, however. International's Koenig says, "Although we've heard of the fuel filter clogging issue with ULSD, we have not been able to verify it. We see nothing inherent in ULSD that would make it clog fuel filters as we've seen with some blends of biodiesel."

International also points out that there's an upside to the use of ULSD in pre-2007 engines – it will help keep the oil clean longer, because there will be fewer sulfur particulates getting past the rings into the oil.

Keep in mind that ultra low sulfur diesel is already making its way into the pipeline, so fuel sulfur levels will be dropping in advance of the Oct. 15 deadline. It would be a good idea to keep an eye on your fuel system over the next several months, especially if you have an older engine.

STORAGE TANKS

If you have your own underground fuel storage tanks, ATA has some recommendations for converting them to ULSD.

"We believe you will have to basically draw down the tank as far as possible, and load ultra low sulfur diesel on top of it three or four times before the tank will be converted to ULSD status," Moskowitz says. After the third or fourth time, he says, take a fuel sample and send it out for testing to confirm it is below 15 ppm. "If it's not, there may be some high-sulfur sediment in the tank, and you may need to pump out the tank and clean it in order to convert it."

Federal regulations don't require you to carry ULSD in your tanks (although it is illegal to use higher sulfur diesel in 2007 vehicles). However, you do have to comply with labeling requirements at the pump.

"Even though they serve a captive audience, fleets are considered 'wholesale purchaser-consumers' under EPA regs," reports the Oil Price Information Service, "and therefore must comply or face the same $32,500 a day fines." OPIS expects that jobbers will be helping fleets understand the new labeling requirements.

BIODIESEL BOOM?

As diesel fuel prices have gone up, so has interest in biodiesel.

Biodiesel can be made from any vegetable oils or animals fats, even used French-fry oil. Most of the biodiesel in this country is made from soybean oil. While biodiesel proponents say you can run pure biodiesel in a diesel engine without modifications, in reality we're looking at no more than a 5 percent blend to maintain the performance characteristics we're used to with diesel.

Biodiesel is nothing new, but in the past, the price premium over regular diesel meant interest was limited. Higher prices for regular diesel have made biodiesel more attractive, as have government incentives.

"With the high energy prices, we're getting a lot of calls," says Amber Thurlo Pearson, spokeswoman for the National Biodiesel Board. Biodiesel production in the United States tripled between 2004 and 2005, she says, from 25 million gallons to 75 million gallons. Currently there are 65 biodiesel plants operating, with another 90 plants proposed or under construction. There are close to 1,600 distributors that offer biodiesel, and the board has identified more than 340 truck-accessible fueling sites.

"When you consider the federal subsidy, about $1 per gallon, combined with state financial incentives, the cost of producing biodiesel is equivalent to the cost of petroleum-based diesel today," says ATA's Rich Moskowitz.

ATA last fall changed its policy on biodiesel to offer its cautious support. It supports the use of biodiesel that meets ASTM quality standards, and only in blends of up to 5 percent biodiesel, also known as B5.

B5 performs just like diesel in horsepower, haulage and torque, and has higher average cetane than most regular diesel.

"We see it as a means to extend the diesel fuel supply," Moskowitz says. "Though it is certainly not a complete answer to our dependence on foreign oil, it is one tool we should use in our toolbox. Last year the biodiesel industry produced 75 million gallons of biodiesel. Last year the trucking industry alone used 36 billion gallons of diesel fuel. Even if biodiesel doubles this year and doubles again, it is unlikely to be the answer to our quest for energy independence."

In addition to being made from a renewable resource that can help reduce dependence on foreign oil and provide a market for American farmers, biodiesel produces lower particulate emissions and has excellent lubricity.

Biodiesel proponents claim the increased lubricity makes for a better- running engine, as well, based on testimonials from individual drivers and owner-operators, but Moskowitz says he hasn't seen any large-scale scientific testing in fleets to prove that claim.

QUALITY CONCERNS

One of the concerns voiced about biodiesel – by the ATA and by engine makers – is that it needs to be high quality. There are industry specifications for biodiesel quality. In 2002, ASTM International issued a biodiesel specification referenced as D 6751. In addition, the National Biodiesel Board created the National Biodiesel Accreditation Commission, which developed a standard called BQ-9000 for use in its voluntary accreditation program.

Concerns about biodiesel quality were borne out last winter, when Minnesota's requirement that all diesel in the state have at least 2 percent biodiesel went into effect.

"We believe there is a need for federal legislation that requires all biodiesel used in on-road engines to be tested and certified as compliant with ASTM standards," Moskowitz says. "Minnesota provides a perfect example why that's necessary. Biodiesel producers in Minnesota took some shortcuts, and some biodiesel that did not meet quality specs made its way into the supply, and it resulted in a significant number of trucks breaking down." Filter plugging was a big issue, and it was found that off-spec biodiesel was part of the problem.

When the problems arose, the National Biodiesel Board and the Minnesota Biodiesel Commission recommended to state officials that the mandate be put on hold, and made recommendations to ensure biodiesel quality.

"We worked with our producers and distributors to educate them that they only accept quality biodiesel, have a certificate of analysis, recommend they do their own sampling of the fuel as it comes in, and make sure they understand the cold flow properties of the biodiesel that's coming in," says Tom Verry, director of outreach and development at the National Biodiesel Board. Since the mandate went back into effect Feb. 10, he says, "we've had virtually no issues.

"The biodiesel industry's growing at an incredible rate, and unfortunately, there are some growing pains when you grow this fast," he says.

Minnesota's mandate is an example of what are called "boutique fuels" – specialized blends produced for a specific state or area of the country to meet state and local requirements. And while Minnesota may be the first state to enact a biodiesel mandate, it won't be the last. Washington State recently passed a biodiesel law that will require the total amount of diesel sold in the state to require 2 percent biodiesel. While this is unlike Minnesota's law requiring every gallon of diesel fuel to include biodiesel, ATA still "is very concerned that Washington is headed down the wrong path."

At press time, ATA and the California Trucking Association were fighting a proposed law in California that would require all diesel fuel sold in the state to contain at least 2 percent biodiesel by 2008 and at least 5 percent by 2010.

CAN YOU GO HIGHER?

Typically, engine manufacturers say you can use biodiesel in engines up to a 5 percent blend – that's true either for current engines or 2007 engines.

The Engine Manufacturers Association's position is that all biodiesel fuel must be manufactured and meet quality standards, including the ASTM standard. Blends of up to 5 percent biodiesel are acceptable, it says, and should not cause problems, as long as the 100 percent biodiesel used for blending meets specifications.

The National Biodiesel Board and other biodiesel proponents (including Willie Nelson) are pushing a 20-percent blend, or B20.

One of the concerns with higher blends is cold weather performance. "The characteristics of a B20 fuel, you have to be aware that it could raise the cold filter plug point 2 to 5 degrees, but it doesn't have a huge impact," says Verry of the biodiesel board. "The same strategies that work on diesel for cold weather operations work for biodiesel – you can put cold flow improvers in it, you can blend it with No. 1 diesel. You just have to be aware of the characteristics, and make sure you run a blend that meets the needs of the environment you're operating in, just like you must with regular diesel. Performance of B20 is essentially the same as [regular] diesel."

However, in its official biodiesel statement, in addition to noting the cold-weather performance concerns, the Engine Manufacturers Association says, "higher percentage biodiesel blends can cause a variety of engine performance problems, including filter plugging, injector coking, piston ring sticking and breaking, elastomer seal swelling and hardening/cracking, and severe engine lubricant degradation." In addition, EMA says, the compatibility of biodiesel with elastomers used in seals, hoses and gaskets remains unclear. Biodiesel also gets poorer fuel economy than traditional diesel.

And at this point in time, says EMA spokesman Joe Suchecki, it's difficult to endorse a higher blend because the industry does not have data on biodiesel's effects on 2007 engines and aftertreatment systems. "Nor do we have much information on how biodiesel will work with ultra low sulfur diesel."

As ATA's Moskowitz notes, "We have virtually no experience with the 2007 engines and with ultra low sulfur diesel. "Even the few [2007] engines being tested by some of the larger trucking companies are subject to confidentiality agreements, so the data from those tests are not being publicly distributed. So it goes to follow, we have even less experience with a blending of biodiesel and ULSD or use of biodiesel in 2007-compliant engines."

According to the National Biodiesel Board, the Department of Energy's National Renewable Energy Laboratory has tested some light-duty Cummins diesel engines running on B20 with ULSD.

"What they saw was it was lubricating better, and also was working in the particulate filters very well," says the board's Verry. "Biodiesel can reduce the matter going through a particulate filter and extend the life of that filter. The most interesting thing they found was that biodiesel particulates catch fire easier than diesel particulates, so it can lower the regenerating temperature [needed by the particulate filter] and lead to potential fuel savings."

If you're interested in using a higher blend than B5, you should consult your engine manufacturer regarding the implications of using such fuel, recommends the association.

"If we just replace 5 percent of the over-the-road truck market with biodiesel, we could replace all the petroleum we import from Iraq," Verry says. "At 10 percent, we would displace all the oil that comes from Saudi Arabia. And we think we can do that, given enough time. We're trying to grow this to a billion gallons by 2015."

LNG IN YOUR FUTURE?

Looking ahead, at some point in the future you may be buying a truck fueled by something other than diesel.

No fuel presently available comes even close to the efficiency of diesel in terms of energy yield, price or availability. But Liquefied Natural Gas, or LNG, is coming on strong as a viable alternative. LNG burns cleaner than diesel, and the cost-to-energy yield ratio looks more promising the higher the cost of diesel goes. From a performance perspective, it's a proven contender. LNG is closer than you might think to becoming a practical alternative to diesel in some applications.

Leading the LNG development charge is a Canadian company, Vancouver, B.C.-based Westport Innovations, operating a joint venture company with Cummins called Cummins Westport Inc.

Westport already has more than 12,000 spark-ignited, LNG-powered vehicles working in various markets around the world, predominantly in urban transit applications. They've got mid-range trucks running spark-ignited LNG engines too, including dump, P&D, and refuse trucks, but heavy trucks – especially in long-haul service – have been lagging behind. Until now.

In 2001, Westport began field tests with Norcal Waste, operating 13 trucks hauling municipal waste from San Francisco to a landfill site located in Altamont, Calif. The trucks make up to six 120- mile round trips per day at a gross weight of 80,000 pounds. As of mid-March, the Norcal Waste fleet – under contract with the City of San Francisco – had logged 5.3 million miles, averaging more than 100,000 miles per month. Several of the trucks have turned over 500,000 miles, and in October 2005, Norcal and Westport extended the agreement, committing to upgrade at least three of the trucks to second-generation hardware.

The Norcal fleet consists of 13 Peterbilt chassis equipped with 400-horsepower Cummins ISX engines modified to accommodate Westport's High-Pressure Direct- Injection (HPDI) LNG fueling technology.

Last May, the company began a one-year project in southern Ontario called The Clean Air Corridor. In cooperation with Challenger Motor Freight, Westport put five engines into revenue service hauling 100,000- pound-GVW loads of beer to Jackson, Mich., from Toronto, and 140,000-pound-GVW loads of garbage from Toronto to Lenox, Mich. The round trip distances are 560 miles and 470 miles respectively. The fleet has logged more than 400,000 miles since the test began.

The Challenger fleet consists of five 2005 Volvo VNLs, equipped with 450-horsepower, 1,650- pounds-feet modified ISX engines.

"The Ontario project was meant to prove the performance of the engine, and show that it would work in a practical application," says Bryan Zehr, manager of heavy-duty demonstrations and deployment at Westport Innovations.

HOW'S IT WORK?

Westport is developing its HPDI technology on a number of engine platforms, but the most advanced heavy-duty version is exclusively with Cummins at this point, and only for the ISX engine.

"The technology can be applied to any diesel engine, in principle," says Zehr, "but we've developed the fuel system to integrate initially with the ISX engine for heavyduty transportation."

The HPDI ISX engine, unlike its medium-duty brethren, is not a spark-ignited engine. Rather, it uses a tiny quantity of diesel to ignite the natural gas in the cylinder. Natural gas has a higher ignition temperature than diesel does, so cylinder temperatures generated by compression aren't enough to ignite the LNG.

"We inject a small amount of diesel on each compression stroke, acting as a pilot ignition, which is immediately followed by a larger injection of natural gas," Zehr explains. "That happens across the entire duty cycle."

The HPDI ISX engine burns about 6 or 7 percent diesel (by energy yield) across a typical duty cycle. At idle, the LNG/diesel ratio is about 50 percent by energy. At full load, it's less than 5 percent by energy. The amount of diesel is almost constant across the duty cycle, whether idling or pulling 140,000 pounds – just enough to initiate ignition. As the load increases, so does the volume of natural gas.

Fuel economy is a bit difficult to gauge, given that LNG is typically measured in pounds, and has a lower energy yield than diesel fuel. But with the appropriate calculations for volume and energy output, results from a two-year Department of Energy analysis of the Norcal LNG test suggest the trucks are averaging an energy-equivalent fuel economy of 4.3 mpg. That compares to 4.8 energy-equivalent- mpg for the trucks running straight diesel.

While 10.5 percent poorer fuel economy may not sound like an achievement, it compares favorably with the results of previous studies conducted on spark-ignited LNG engines, which showed a fuel economy penalty of about 34 percent compared to straight diesel.

The fuel tanks are a proprietary low-heat-leak design, equipped with an integrated LNG fuel pump and heat exchanger tapped into the engine's cooling system to turn the liquid stored in the tank to a gas. The liquefied natural gas provides 2.5 times the energy storage per volume compared to compressed natural gas. It's stored in the tank at about 100 psi, but it's pumped up to 4,000 psi before it reaches the injectors.

The stock Cummins injectors are replaced with Westport's proprietary dual-fuel injectors that flow both liquid diesel and natural gas. They're still unit injectors, but the fuels travel different paths through the injector, not mixing until they reach the combustion chamber. Direct injection allows for sophisticated control over timing and quantities of fuel, allowing the engine to perform like a diesel, and providing more flexibility in calibrating the engine.

The same internal fuel rails are used to get the fuel to the injectors, but there's a high-pressure diesel injection pump in there too. The hardware modifications are not extensive, but in the initial prototype stage, they are expensive. As the system progresses to limited production, and later into full production, Westport expects the cost to come down significantly.

The base-engine ECM remains the same, doing all the basic fuel calculations and commands. Westport's controller takes and reads the basic fueling commands from the engine ECM, and uses them to manage the natural gas fueling. The torque and horsepower curves remain the same as a standard ISX.

The 2004-compliant engines used on the Ontario test use the same cooled-EGR systems as their full-diesel counterparts, but the emissions are said to be running at near 2007 levels – without the exhaust aftertreatment. In fact, Westport recently received California Air Resources Board (CARB) certification for its HPDI engines to run at 1.2g/bhp-hr (NOx), and 0.02g/bhp-hr (PM).

Following the CARB certification announcement, Westport announced the ISX LNG engine would become available to select fleets with the appropriate Cummins 2004 to 2006 model-year (new or retrofit) diesel ISX engines beginning in 2006. The engine will be offered in two ratings: 400 horsepower/1,450 pounds-feet torque, and 450 horsepower/1,650 pounds-feet torque, matching the diesel-fueled base ISX engine.

READY FOR MARKET?

"CARB certification represents the major milestone required for us to make the heavy-duty Cummins ISX HPDI LNG engine and fuel system available to commercial fleets in California for deployment in 2006," says Michael Gallagher, president and COO of Westport.

But that's just a small part of the puzzle. "The next step in the commercialization of this technology is a project where we can prove the economies of the system on a larger scale. The five-truck trial at Challenger wasn't intended to prove that. It's a costly venture to build five trucks using a lot of prototype parts," Zehr says. "You don't get the economies of scale in a test that size."

Zehr recognizes that operators will be looking at ROI on the equipment, so for this to work on a large scale, there has to be either attractive fuel pricing, or some strong policy in place promoting the use of alternative fuels.

As far as pricing is concerned, Zehr says it's impossible to hang a dollar figure on the HPDI ISX engine now. The hardware modifications are relatively minor, and include an add-on fuel delivery system, a high-pressure pump for the LNG, and a heat exchanger to convert the liquid fuel to a gas. The trucks require a standard diesel fuel tank, as well as the pressurized LNG storage tanks.

According to Zehr, "pricing will be defined as Westport prepares for a product roll-out later in 2006."

Among the larger hurdles still to be overcome is the availability of LNG. The fuel used in the Challenger Clean Air Corridor test had to be trucked nearly 400 miles from the source to the fueling facility, so the cost of the diesel-energy-equivalent volume of LNG is extraordinary. The fueling infrastructure, including the storage tank and the pumps, add to the cost, but the Canadian test was not about proving the economics of such a system.

"There's a lot of equipment required to run five vehicles," says Kurtis Wadley, Westport's field service technologist stationed at Challenger's London, Ont., terminal. "It wouldn't cost that much more to support 50 or 100 vehicles."

In Norcal's case, the fuel is trucked in from Wyoming, but the costs are spread out over a fleet nearly three times the size. Still, economics are an issue.

Areas of the country that have marine access to world supplies of LNG, or areas where pipeline access and storage facilities exist or can be built, are prime candidates for LNG fueling depots. Carriers located near such facilities could see advantages in switching to LNG. In addition, carriers that can run trucks in close proximity to the fuel supply, such as local and regional operators, can run without fear of having to refuel en route.

"Right now, the best applications are regional, where they go out and return to a base on the same day," says Zehr. "We're also exploring corridors where en route fueling is practical and the traffic volumes are high."

Certain locations around North America have advantages over others, such as the East Coast with its marine terminals and easy access to offshore supplies. As far as Westport is concerned, it sees California as the most likely place to stage the initial roll-out.

"They've got very aggressive environmental policies, and funding programs in place for adopters of alternative fuels," Zehr notes.

As for the pricing of the fuel, Zehr stresses it's impossible to toss out a number at this point. The raw material is reasonably priced, but the spread between diesel and LNG depends on many factors, including distance from the LNG fuel source and regional fuel taxation policies.

Clearly, LNG isn't for everyone. To date, Westport has proven that LNG works in a heavy-duty diesel engine with comparable performance and efficiency, and lower emissions. Fueling infrastructure will be an issue for some time, but with diesel's increasingly volatile price, and the propensity toward lowering our dependence on foreign oil supplies, LNG could establish itself in certain areas sooner than some might expect. Maybe even as soon as your next trade cycle.

ANTI-IDLING MEASURE NOT IN FULL GEAR

Congress passed a law to help cut unnecessary truck idling, but a bureaucratic snag has reduced the measure's effectiveness.

In last year's Energy Act, Congress ordered that the weight limit be raised by 400 pounds for trucks that use auxiliary power units as an alternative to engine idling for heating, air conditioning and other driver comforts. The idea was to take away the risk of an overweight fine – and the penalty of 400 pounds less cargo capacity – for carriers that wanted to save fuel by installing APUs.

Trouble is, the Federal Highway Administration reads the law as discretionary: While the states are not penalized for allowing the extra 400 pounds, they are not required to allow the weight – and many are not.

At least one state, Florida, has issued overweight citations for APU-equipped trucks, says Glenn Kedzie, assistant general counsel of American Trucking Associations. The intent of the law was to create a national standard, but FHWA has interpreted it as permissive.

"It was the right thing to do, and now we have a federal agency that won't even allow Congress to do what it wants," Kedzie says.

Absent a change in the language of the law, FHWA believes it cannot make the higher limit mandatory. The agency has, however, published a proposal for implementing the provision as it interprets it.

Under the rule the agency is proposing, a driver must certify that the APU is used for idle reduction, is in working condition and weighs no more than 400 pounds. The proposal was published in the May 1 Federal Register, and the agency is seeking comments.

The same law that created the APU exemption authorized $19.5 million in 2006 for reducing truck idling, but that money has not been appropriated – a reflection of the budget crunch, Kedzie says.

SHUTTING IT DOWN:ANTI-IDLING SOLUTIONS

The Environmental Protection Agency says long-duration truck idling burns close to 2 billion gallons of fuel a year, costing truckers plenty with diesel prices near $2.90 a gallon nationally. The EPA says idling trucks also pump tons of emissions into the air, prompting 15 states and numerous local jurisdictions to restrict truck idling. Last month the EPA published a "model anti-idling law" in response to trucking industry concerns about the patchwork of rules regulating idling.

Higher fuel bills and increasing regulation boost interest in idle reduction equipment. That recently translated into several truck OEMs introducing "idle-reduction" packages on new truck models. Recognizing the reason drivers idle their trucks is to keep the cab warm in the winter and cool in the summer, these packages can include auxiliary power units, electric HVAC units, shore power and other engine-off options that allow drivers to stay warm or cool while the truck engine stays off.

Cutting down on idling does save fuel and money. One fleet told HDT they saved just over 200 gallons of fuel per truck per month after spec'ing APUs. In an interview last fall, owner-operator Marion Braiser told HDT he figured long-term truck idling cost him 2 mpg in overall fuel economy.

The most common anti-idling solution involves an APU, a small diesel-powered generator that can charge batteries and power electrical appliances and comfort features. The small engine in an APU burns about three-tenths of a gallon of fuel each hour, versus three-quarters to 1 gallon per hour for an idling truck engine. Combined with electric heating and cooling systems, such no-idle packages keep things comfortable when a driver overnights. They also provide 120-volt power for TVs, computers, power tools, coffeemakers and microwave ovens.

Other products available provide idle reduction benefits without an APU. These include fuel-fired heaters, self-contained battery-powered HVAC systems and shore power systems with charger/inverters.

Many of these systems have been available in the aftermarket for some time and are becoming increasingly available as factory-installed options from many truck OEMs.

Western Star Trucks Idle Solutions package, available on new 4900-series trucks as optional factory-installed original equipment, includes a 14,000-Btu HVAC system from Dometic Environmental Corp. and Temco Metal Products's 7.2-kw power generator. The HVAC system's condensing unit is mounted outside the cab with the cooling/heating unit installed inside the sleeper. The generator powers the air conditioning unit and other electrical appliances.

www.westernstartrucks.com

A factory-installed APU is part of International Truck and Engine Corp.'s No-Idle Solution product line for 2007 model 9900 trucks. The system provides 6-kw, 120-volt AC power, 50- amp, 12-volt battery charging and 10,000 Btu per hour of cooling or heating capacity.

The APU mounts on the truck's frame rail, while the HVAC system is located in the passenger-side luggage compartment. An optional remote start key allows drivers to start the APU and heater unit from up to 1,000 feet away.

International also offers an integrated fuel-fired cab and engine heater option for cold operating environments.

Shore power can also be ordered as an option, which can re-charge batteries, run appliances and power electric HVAC systems.

www.internationaldelivers.com

Kenworth Truck Co.'s Clean Power System uses four Group 31 deep-discharge batteries to supply the power for cooling the sleeper and 110-volt accessories.A diesel-burning heater supplies the heat for cold nights.

Kenworth says the system's cooling and electric capacity is generated and stored as the truck is driven down the road or when connected to shore power. When the truck is shut down, the battery-powered cooling system takes over for up to 10 hours of engine-off operation.

www.kenworth.com

Freightliner Trucks offers an engine-off climate-control system on new Century Class, Coronado and Columbia truck models. It uses the Bergstrom NITE (No- Idle Thermal Environment) system that works independently of the truck's main engine.

The system keeps the sleeper compartment cool via an electric AC system powered by four deep-cycle batteries that recharge when the truck is running. Heat is supplied by a fuel-fired heater that uses between .03 and .06 gallons of fuel per hour.

The AC system produces 3,500 Btu of cooling capacity, while the heater delivers 2,900 to 7,500 Btu per hour.

www.freightlinertrucks.com

Volvo Trucks North American recently displayed two trucks equipped with mobile idle reduction technologies that reduce idling while giving drivers the electrical power they need. The systems include the Cummins ComfortGuard and Mechron CCS Lightning systems. Each system includes a 120-volt AC generator. Both display trucks were wired for shore power, when that is available.

The Mechron unit also includes an AC-powered HVAC system that operates when the truck's engine is off.

Volvo recently received a grant from EPA's SmartWay Transport Partnership to develop factory- installed prep kits for mobile idle reduction equipment.

www.volvotrucks.us.com

Thermo King's TriPac uses an APU, AC system, fuel-fired heater and Thermo King's Cycle Sentry start/stop technology to allow truckers to comply with anti-idling laws while drivers sleep comfortably.

In cool climates, the TriPac generator engine will only start if battery charging or engine block heating is needed. Otherwise, only the fuel-fired heater will operate to warm the cab. When the batteries need charging, the TriPac's generator motor will start and then shut down again when not needed. This reduces the amount of time the TriPac's motor runs.

The TriPac's APU is mounted on the frame, the condenser is mounted on the rear cab wall and the heater and AC evaporator are installed under the sleeper bunk. A two-cylinder diesel engine powers the AC compressor and a 12-volt alternator, keeping the cab cool and the batteries charged.

www.thermoking.com

Webasto recently updated its fuel-fired heater for truck cabs with new functions and more flexible installation options. The Air Top 2000 ST can now run on a 20- percent biodiesel-blend fuel. The heater uses about 0.05 gallons of fuel per hour.

When combined with Webasto's BlueCool Truck bunk AC system, drivers can stay comfortable year-round without idling the truck engine. The BlueCool Truck unit features a 17,000-Btu cold storage unit mounted to the truck's frame rail and a cab-mounted air-handler with fan and temperature controls. It provides up to 10 hours of cooling operation while drawing only 3.5 to 6.5 amps while operating. The system is completely independent of the truck's HVAC system.

www.webasto.us

Carrier Transicold and Teleflex, maker of the Proheat Gen4 APU system, teamed up to offer the ComfortPro APU with Carrier's new Deltek hybrid diesel-electric technology. Deltek uses electric power generated by the unit's diesel engine and a special generator.

The unit provides power for electric appliances, cooling and heating from a 4,000-watt generator driven by a Kubota diesel engine.

The system features 110/120-volt AC household current, 40 amps of battery charging, engine warming, start/stop operation and optional shore power.

www.carrier.com

Dometic Environmental Corp.'s new auxiliary air-conditioning system is designed for daycabs and small sleeper trucks and allows drivers to stay comfortable and turn off their engines while waiting at terminals and loading docks.

The AC operates off the truck's batteries and does not require an onboard APU. The system includes an AC system, DC-AC inverter, high-capacity alternator, thermostat control and optional shore power plug.

Truck owners can choose from a 7,000-Btu self-contained AC unit or a 10,000-Btu split system, with the condensing unit mounted outside the truck. The air conditioners run on 115-volt power .

www.dometic.com

The SCS/Frigette APU system uses a single-cylinder Kubota engine to provide power, heating and cooling while burning only about one-tenth gallon of fuel per hour. In an interview last fall, Dwayne Schwarze, western region sales manager for the Ft.Worth, Texas-based company, says the units have been on the market for about five years and take about 16 hours to install.

The system uses an automotive-type air-conditioning compressor and a 120-amp alternator to provide heat and air while charging the truck' batteries.

The Premium Hybrid APU system includes a 3.5-kw generator and a 7- horsepower diesel engine which produces 10,000 Btu of heat and 12,000 Btu of AC plus 3,300 watts of 110-volt electricity for on-board appliances. The system also includes a 40-amp battery charger.

www.scsfrigette.com

Available since the 1980s, the Pony Pack APU system provides heating, cooling, battery charging and engine heating.An optional inverter for 100-volt power is also available. The unit features a 10-horsepower Kubota diesel motor, 110-amp alternator, 10.2-cubic-inch compressor and electronic shutdowns. J. Rex Greer, company president, told HDT the design is essentially a miniaturized version of what's under the hood of a regular truck.

www.ponypack.com

RigMaster APUs are powered by a 13.9-horsepower Perkins diesel engine and provide 120-volt current via a 6,000-watt generator to run appliances and power tools.A 60- amp battery charger keeps the truck batteries charged and the unit provides heating and air conditioning.

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