FOR MANY petroleum haulers across the United States, the shift to ethanol from methyl tertiary-butyl ether (MTBE) has been an exercise in frustration. More problems are likely at least through the rest of May, and distribution will continue to be the primary choke point.
Not surprisingly, the ethanol switchover was one of the topics of discussion at the National Tank Truck Carriers annual conference May 7-9. Bulk Transporter will carry a full report on the conference in the July issue.
Some petroleum terminals have closed during the switch to ethanol, long lines have tied up transports and drivers for hours at other terminals, and shippers are scrambling to round up enough transportation for the ethanol movements. All of this is aggravated by the fact that demand for gasoline is high and is rising despite historically high prices.
The shift to ethanol was prompted for environmental reasons. MTBE has been found to contaminate groundwater, and many refiners are worried about costly lawsuits. However, ethanol has some drawbacks of its own, including a tendency to absorb water, which can contaminate an automobile fuel system.
Some petroleum terminals drained down their storage tanks containing gasoline and MTBE blends prior to the ethanol switchover, and this brought product shortages and delivery delays for convenience stores and other retailers. Terminals also had to clean out storage tanks and make sure all water was removed.
In some cases, terminals weren't able to get ethanol in a timely manner. Pipelines are not moving the ethanol due to the water absorption concerns. As a result, ethanol must be transported from processors (most of which are in the Midwest) by barge, rail, or truck.
With fewer terminals on line, petroleum haulers ended up with their transports and drivers sitting in long lines for many hours. Productivity has been reduced significantly. Drivers are literally running out of hours.
The truck transport situation has gotten so bad that a number of calls have gone out from state officials to the Department of Transportation requesting a temporary relaxing of the driver hours of service. Discussions continue on that.
The problems with the switch to ethanol may be relatively shortlived even without a temporary suspension or relaxation in driver hours. However, this is probably just the first act in a drama that will play out over the rest of 2006.
Refiners will launch full-scale production of ultra low sulfur diesel (ULSD) in July under Environmental Protection Agency mandate. This will put further strains on the already stretched petroleum distribution systems. More hiccups can be expected.
Today's tank truck industry simply does not have the spare capacity to handle distribution inefficiencies. Shippers need to do everything they can to help petroleum haulers meet the market challenges.