Diesel Disruption

ALEXANDRIA, Va. – On this week’s episode of Convenience Matters, “IMO 2020: Disruption or Opportunity for Fuel Retailers,” hosts John Eichberger and Donovan Woods of the Fuels Institute, discuss changes in diesel fuel production with Denton Cinquegrana, chief oil analyst in research and analysis for OPIS (Oil Price Information Services).

In 2016, the International Maritime Organization (IMO) passed a law that changed the marine fuel sulfur regulations, which will go into effect in 2020. Why should retailers care about that change? Because refiners will be deciding whether to reconfigure to make this special diesel fuel, which could impact diesel production overall.

“The entire program is designed to reduce emissions, and while headlines saying this will be the most disruptive impact on the diesel market in decades, marine fuel is only 6 to 8 million barrels of oil a day,” Eichberger said. “It’s not that much in terms of volume in the big picture of overall fuel supply.”

However, Cinquegrana pointed out that “as more refineries make diesel for the marine market, that might detract from the downstream market for diesel.”

The real impact of these coming changes on convenience stores could be higher diesel prices. “Diesel prices will go up because there’s more competition for the middle of the barrel,” Cinquegrana said. “Higher diesel prices will mean smaller margins for the retailers. There’s also a small outside chance this will impact gasoline too.”

Each week a new Convenience Matters episode is released. The podcast can be downloaded on iTunes, Google Play, YouTube and other podcast apps, and at www.conveniencematters.com. Episodes have been downloaded by listeners more than 60,000 times in 80 countries.