Truckers are expected to drive a big boost in US demand for diesel this year, adding pressure to an oil industry already wrestling with tough new sulfur limits on diesel that could crimp supply.

Total US demand for distillate fuels, including diesel, is expected to jump 2.4 percent in 2006, according to the government’s most recent forecasts – in line with higher trucking activity forecast by the trucking industry.
 “We have expressed concerns that the government needs to ensure that ultra-low sulphur diesel fuel is available everywhere,” said Bob Costello, chief economist for the American Trucking Associations. “And we're concerned that that may not happen ... that there will not be enough.” The US government will require all diesel for use on the road to contain sulphur levels of 15 parts per million or less by October – down from the 500 ppm limit currently in place – to improve air quality.
Refiners are racing to upgrade their plants to meet the looming fuel rules, to be introduced in June and fully implemented in time for all on-road diesel vehicles starting  with 2007 models.
“The physical problems of delivering this product are real. They're not hype," said Joanne Shore, senior analyst at the US Energy Information Administration, the statistical arm of the Department of Energy. “This is probably the most difficult transition of this type.”
Trucks carry 70 per cent of tonnage transported in the United States, and have been increasingly busy getting goods to market as imports soar from China to the West Coast. ATA’s November 2005 data showed its tonnage index measuring goods moved by US trucks was 2.3 per cent higher vs October and 2.6 per cent higher compared with November 2004. That put the year-to-date increase at 2.1 per cent. December and year-end data will be tallied by late January.
“We expect the 2005 increase of tonnage to have been around 2 per cent, roughly equal to the increase in diesel use by the industry,” ATA’s Costello said. “Roughly the same growth as 2005 should be expected in 2006.”
US diesel prices were forecast to rise 4 to 6 cents per gallon on average because of the stricter government sulphur standard, the US Energy Information Agency said on Tuesday in its Short-Term Energy Outlook.
Costello and the EIA’s Shore both said the concern is not that refiners won’t be able to make the fuel, but rather that suppliers may not be able to maintain the specifications while transporting it.