By Glen Sokolis, Sokolis Group
April showers bring May flowers ... but you might already have water in your fuel tank!
This happens more than just in the spring time. You may have an above ground fuel tank, or the saddle tanks on your truck may sit in the sun all day long. On your saddle tanks you have warm fuel running back through them, then what happens? At night it gets cool and causes a little bit of a rain forest in your fuel tank.
The approach of spring seems to bring this problem of issues with water/moisture in fuel storage tanks the most. If your winter fuel supplier used an alcohol-based winter additive (we hope they didn't) or a demulsifier to remove water from your diesel fuel the question you have to answer is, "Where did the water go?"
The answer is, all of that water is now sitting on the bottom of your tank. So what are you going to do about it?
You have a couple of ways to take care of it. It is smart just to have good housekeeping anytime you are talking about fleet fuel or gas. A little extra effort put in on the front end saves you a lot of time and expense on the back end.
Option 1: Pump off the water. The best option. How much is the cost to pump off the water and dispose of it? If you don't have enough water to pump off what are you going to do?
Option 2: Forget about it. This could be very costly in the long run. ULSD has no natural biocide and eventually you will have an algae/fungus/mold outbreak that will stop your equipment or stop your customers, giving you a reputation for having "bad" fuel. The long-term effects are tank corrosion and then tank replacement.
Option 3: Treat your tanks with a "drying" agent. This is economical and can rid storage tanks of excessive water buildup with multiple treatments. What type of drying agent to use? The use of an emulsifying agent will allow the water to move into suspension in the fuel and pass through the combustion process. My fuel additive friend Dusty Wright is always talking about this.
ULSD has more moisture than diesel fuels of old. Tank maintenance is now more important than ever. And we're not talking just about bulk storage. Equipment that sits for long periods can have the same issues of tank corrosion and "bugs."
The proactive approach of using a year-round fuel additive program can consist of two very effective programs:
Program 1: Early Spring-treat all tanks with a drying agent to remove moisture accumulation from the winter season. Follow up this treatment in late spring with a maintenance dose of an algaecide to prevent algae/mold/fungus growth as temps begin to rise. Follow up an additional drying agent treatment in late summer/early fall to remove excess water prior to cold weather to help fuel performance as temperature drop.
Program 2: Begin treating/using a premium package from your fuel supplier or purchase one yourself and treat your fuel year round. Some premium diesel packages have been shown to reduce emissions by as much as 45 percent, provide lubricity to critical fuel components for longer life, lower soot contamination in oil, and provide fuel economy increases all while helping to manage moisture in your tanks from bulk storage to individual units.
Like with most programs, you want to talk to someone who understands what you are trying to accomplish. Be careful; not all fuel additives are the same. If you deal with a professional fuel additive person or fuel consultant, you should get what you are looking for at a good price.
By Glen Sokolis, Sokolis Group
Fuel Management might be lost at sea, but it hasn't gained any demand on land either. What are we talking about? For the last 18 months or so the volume of fuel being stored at sea on tankers had climbed rapidly. Last year we had almost 90 million barrels of crude oil or fleet fuel or heating oil floating around in this huge stockpile of extra volume.
That amount of fuel floating has declined to 43 million barrels, and we will probably see that number erode even more as in recent weeks freight rates have risen and the spread in the price gap between storing it at sea and selling it at a later date has become even greater to speculate. This fleet fuel sitting on a tanker ship waiting for the price to rise has been another energy speculation that has been going on for a while but several groups feel that this market is drying up. Even though the International Energy Agency expects a 1.8 percent growth in fuel demand in 2010, supply is still plentiful and spare capacity in oil producing countries remains high.
When oil on the spot market traded at a big discount to forward-dated contracts, this caused energy speculators to take part in this fuel floating feast. In the futures market this is known as "contango." Traders took advantage of that by buying crude or any type of fuel and putting it into storage on tanker ships to sell at a higher price at a future date. Risky, yes, but that is why they call it speculation. Now with the U.S. demand for diesel fuel and heating oil down almost 8 percent in January from a year earlier, there seems to be too much risk on betting on fleet fuel prices rising on floating tankers. This winter has been very cold throughout the largest heating oil consuming area of the country, the Northeast. Transportation has not shown any real signs of getting back especially in historical low freight months like January and February.
The Energy Information Administration is predicting in its latest reports that crude is going to come back and average $81 a barrel. We have heard others forecast oil prices rising, as they expect fundamentals to improve through 2010 and view declining inventories as the catalyst that will lift prices to $95 a barrel by year-end. This could certainly happen if we can get our economy to start to grow at a little quicker rate than what it is currently doing. Yes, we always have China to push demand, which I am sure they will, but the U.S. demand can't be going down if oil prices are going to rise.
As I said in another article in early 2009, what kings want kings usually get. Does anyone remember that crude oil was around $40 a barrel at the time? King Abodullah of Saudi Arabia said the "fair price" for crude oil should be $70 to $80 a barrel. Since June 2009, the King has basically gotten what the king wanted. I don't know if we should expect that to change much until greed kicks in.