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Customer LoginsVideo: Fuel options and the long-term implications for auto makers
As auto makers develop next-generation, fuel-efficient engines, they must ensure they run on the fuels that refineries will be able produce cheaply in volume.
Interview Transcript
The long term implications for improved efficiency of the vehicle and reduced vehicle miles traveled, which we're seeing because of the urbanization of the global population, are that demand for fuel is going to moderate, in fact some forecasts are that gasoline demand will be about flat over the long term. And so we get growth in Asia and moderation in Europe and the US.
Diesel demand, on the other hand, will continue to grow, because that's the movement of goods. And what you have, there for, is refinery output becoming unbalanced between what Mother Nature wants us to deliver out of each barrel of oil and what we actually demand. So, we have a surplus of light fuels, gasoline and other light ends, and significant demand for the heavy fuels, so we have an imbalance in the refinery. The upstart of that is that gasoline will become a surplus product, will become very inexpensive at a time when we really don't want to use it as a motor fuel.
This imbalance at the refinery is going to make a much broader range of lighter fuels available at low cost. At the same time, what the auto industry is trying to do is develop engines that are ever more and more efficient; they're actually approaching Carnot efficiency, which is the ideal efficiency. To do that we need very highly specified, well defined fuels. So, you have the oil industry wanting to sell you a much broader… broadly specified lighter range of fuels and the industry developing engines for a very narrow range. So, we have a miss-match between what the auto industry needs and the fuels that will be available plentifully and at low cost.
The action that the auto industry and the refining industry have to take is to get together. It takes five to ten years to develop a new combustion system and get it into the marketplace. And over that time, while the industry is trying to work on one fuel, the situation at the refinery is changing and they can much more cost effectively deliver a different fuel. We need a dialog to start now that looks long term at what will happen and develop engines of the future for fuels of the future.
IHS is taking the lead in trying to bring those two parties together, along with the policy makers who can help us with this dilemma, and take advantage of this plentiful resource that we have.
Phil Gott Senior Director, Long Range Planning, IHS Automotive