Does your business use diesel powered vehicles? If so, pay attention. An upcoming 2010 (that’s in six months folks) Federal Regulation affects YOU.
As you may or may not know, ALL 2010 model year vehicles with a diesel fuel powered engine will have some new requirements. The EPA’s “Clean Diesel Rule” mandates diesel engines eliminate 90% of the currently allowed emissions of Nitrogen Oxide (a.k.a. NOx).
Engine Manufacturers have two technologies to choose from when it comes to solutions to this undoubtedly very expensive problem: 1)Exhaust Gas Recirculation (EGR) and 2) Selective Catalytic Reduction (SCR)–Think Betamax v. VHS. SCR is winning standard in this battle and most diesel engine manufacturers have already committed to it like Ford, Dodge, and GM.
So what does this mean for business owners and mangers that use diesel powered vehicles in their day to day business activity? Work and Expense. Implementing a new technology into a production is always expensive the first couple of model years, but the SCR equipped vehicles will require “Diesel Exhaust Fluid” (DEF) to operate properly and stay in compliance. You thought fuel was expensive? You ain’t seen nothin’ yet.
SCR equipped vehicles will consume about 1 gallon of DEF for every 50 gallons of diesel fuel burned. How much does a gallon of DEF cost? If it’s purchased in the small consumer packaging or the highly marketed “totes”… as much as $8 per gallon. I’ve heard numbers thrown around like “$35” per gallon, but I’m just not seeing that. $8/gallon feels about right. Large 18-wheelers may see some relief because they will conserve fuel, but this new regulation certainly isn’t going to save anyone any money. This is a direct new cost. Businesses with smaller diesel trucks, such as ground support vehicles at airports, work trucks that are utilized by my construction and paving clients, car dealerships, delivery companies (FEDEX, UPS), and municipal and county government vehicles will be affected just to name a few.
So, what’s the best way to save money? My advice—install an underground storage tank and buy in bulk from the manufacturer. You will save about $5/ per gallon on DEF if it’s bought in bulk. Yes, installing an underground storage tank is expensive but in the long term the upfront expense will pay for itself quickly when you calculate the cheaper per gallon price of DEF.
Or better yet, form a partnership with other local companies that are affected by this regulation and install one underground storage tank that everyone in the partnership uses. I suggest this business structure quite a bit when consulting to corporate aviation departments looking to install fuel farms. All of the businesses involved in the partnership will save money and break even on the initial tank installation MUCH faster.
In the end, DEF is going to be a household name next year and there’s no way around it. Start strategizing now on a method and plan to keep your cost as low as possible.
For more information on DEF or on installing an underground storage tank log on to www.desconsultants.com or email me at rlynch@desconsultants.com.
