Pilot Fears Rail Crisis Will Cut US DEF, Biofuel Supply

by Abby Caplan (Argus Media) Refined products retailer Pilot Travel Centers fears a move to cut rail traffic by western US railroad Union Pacific (UP) will drive a shortage of diesel exhaust fluid (DEF) and ethanol in the US.

UP this month ordered Pilot to cut rail shipments by 50pc or face embargoes on shipments of DEF — an important solution used to cut NOx emissions from diesel engines without hurting fuel efficiency — as well as ethanol, biodiesel and renewable diesel, Pilot chief executive Shameek Konar told the US Surface Transportation Board (STB) yesterday .

UP's "restrictions will prevent Pilot from keeping many markets adequately supplied with DEF, likely causing shortages that will sideline trucks and reduce trucking capacity," Konar said on the second of STB's two-day hearing on the rail service crisis.

Pilot estimates it supplies 30pc of the DEF in the US. The company provides more than 300mn USG of DEF to the trucking industry annually, with about 74pc of that shipped by rail. Pilot also provides roughly 20pc of the nation's highway diesel, renewable diesel and biodiesel.

Cutting Pilot's renewable diesel volume, with about 50pc being shipped by rail, would increase fuel prices in certain states and potentially dry up supply, he said.

Cutting ethanol shipments from Pilot's plant in Nebraska to Arizona, Nevada and a few other regions is also expected to remove the amount of ethanol available to blend with gasoline, potentially raising prices. READ MORE

Excerpt from AgWeb: U.S. Surface Transportation Board (STB) kicked off a busy week of public hearings on Monday, with Biden administration officials, like Pete Buttigieg, looking at steps to hitch the disrupted railway system back together.

Railroads in the U.S. typically transport more than 370,000 carloads of ethanol per year, according to the Renewable Fuels Association (RFA). Currently, the STB shows average railcar dwell time for ethanol this week is at 61.4 hours, nearly doubling the same weeks average in 2021 at 37.1 hours.

With EPA suspending the E15 summer ban and the Biden administration dedicating $100 million to ethanol availability at pumps across the nation, refiners will likely see a spike in demand that might be stretched if there aren’t enough railcars moving ethanol.

Geoff Cooper, president and CEO of the RFA, spoke to the renewable sector’s reliance on “efficient and timely” rail service by submitting written testimony to be addressed during the hearing.

“The rail traffic congestion issue and subsequent decision to meter traffic is leading to major disruptions for our members and is impacting their ability to maintain production and deliver vitally important fuel ethanol to the market,” he says.

Labor shortages and inefficient use of railways have frequently mumbled through microphones at the STB hearing, according to Jared Mullendore, RFA director of government affairs. He says much of the proposed action in the hearings have centered around privately owned rail cars.

“We’re focused on getting these privately owned cars moving at a pace we used to see because this slow trend is impacting our producers and our membership,” he says. “We’re still getting the product where it needs to be, but the inefficiency is causing our producers to slowdown or even shutdown completely.”

According to Cooper, more than 70% of ethanol produced in the U.S. is transported by rail across the lower 48 states, along with Canada and Mexico. As United States Trade Representative Katherine Tai visits Canada this week to discuss USMCA, we will likely hear more on rail situation across borders.

EPA Administrator Michael Regan shared a similar ethanol conversation with AgriTalk Host Chip Flory earlier this week. READ MORE