San Francisco, CA — 11/14/2017 — Diesel fuel is witnessing significant demand from various sectors, particularly automotive and transportation. The global market is set to witness interesting growth dynamics shaped by a wide spectrum of factors. The pricing of the fuel, technological advancements in the automobile industry, government regulations, and regional demographics are the crucial factors driving the shifts in the market. In addition, the emergence of alternative fuels, most notably natural gas, and improvements in various electric-based technologies such as regular hybrids, plug-in hybrids (PHEVs), and pure electric vehicles (EVs) are expected to alter the demand for diesel. These key aspects are instrumental in evaluating and understanding the demand patterns and supply dynamics in different economies. The rapid industrialization of emerging markets, coupled with the soaring use of diesel in non-transporting applications, such as for residential and commercial heating applications, has triggered the demand for diesel fuel across the regions.
The market in leading industrialized regions such as the U.S., Canada, Europe, Japan, and Australia may witness a slowdown due to adoption of natural gas fuel alternatives in some sectors. However, as emerging nations in the process of industrialization undertake intensive oil extraction activities, they mainly undergo oil-driven economic expansion. The significant demand in emerging markets will make up for the slight slump in demand from advanced economies.
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The reasons for declining demand in Europe and the U.S. vary widely. In the U.S., the bulk of the demand comes from commercial transportation while in Europe, diesel forms the key fuel in over half of the light vehicle fleets, and hence the demand for diesel majorly comes from private vehicles. Hence, stringent regulations related to fuel efficiency standards are expected to hinder the market growth in Europe to some extent.
Global Diesel Fuel Market: Overview
The growth of the global transportation industry is likely to increase the demand for diesel fuel over the coming years by a large extent. Gas oil, which is a heavy oil produced from fractional distillation of fuel oil, can be used for both automotive applications and heating purposes. Gas oil used for automotive purpose – commonly known as diesel fuel or even the “35 second oil” – is quite the necessity in industrial, commercial and agricultural, and off-road vehicles applications.
The dual application of diesel fuel depends on the type of diesel that is being used. Regular or white diesel can be used in automotive and industrial applications, while red diesel – which is another type of diesel but mixed with a red dye – can be used for domestic purposes. Red diesel is exempt of excise duty and the red dye makes it easy for users and authorities to identify which kind of diesel is being used. Diesel fuel can be segmented on the basis of source of production into bio-diesel, biomass to Liquid (BTL), petro-diesel, and gas to liquid (GTL).
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Global Diesel Fuel Market: Top Trends
The global diesel fuel market is expected to grow in volume and revenue in tandem with the automobile industry, owing to the dependence of automobiles on diesel and the increasing reliance on newly proven technologies aimed at improving vehicle fuel efficiency. Vehicles running on diesel fuel are expected to deliver at least 20% to 40% more mileage per gallon then petrol or gasoline vehicles. Heavy-duty vehicles form the bulk of the demand volume in the global diesel fuel market. The commercial transportation sector is also improving swiftly around the world, especially in the developing economies of Asia Pacific and Latin America.
Unreliable and low power supply is a problem plaguing a large number of nations today. Large power consumers whose daily operations are highly dependent upon a steady supply of electricity are opting for diesel fuel-based power backup systems in case the grid supply falters.
Global Diesel Fuel Market: Future Prospects
Diesel generator sets are the preferred form of decentralized backup generation for large or industrial consumers of electricity. They are likely to become the key area of opportunities in the global diesel fuel market over the coming years. Diesel generators are also used for supplying intermittent power to rural households, where renewable energy generation is not possible and drawing new grid connections is not feasible. Diesel also finds a high scope of use in space-heating and other residential purposes. Many countries in Europe consistently use diesel fuel as an integral part of meeting their domestic energy requirements.
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One of the key restraints acting on the global diesel fuel market remains its higher price than gasoline and the volatile price trends of the fuel in general. The reason for this higher price is that diesel is an international commodity and many countries rely on it. Ultra-low sulfur diesel (ULSD) specifications further increase the cost of diesel fuel. Additionally, the taxes imposed on diesel are also higher than gasoline. The end users of the global diesel fuel market can be segmented into transportation, domestic and commercial, and power generation.
Global Diesel Fuel Market: Region-based Analysis
Asia Pacific is likely to be an extremely promising region for the proliferation of the global diesel fuel market in the forecast period. This can attributed to the increasing vehicular usage in the region and especially in commercial vehicles, coupled with the increasing need to decentralize rural electrification projects. Europe and North America are expected to continue being high-value regions for the global diesel fuel market in terms of both demand volume as well as rate of increasing in demand. However their transportation sector is likely to see a greater scale of penetration for fuels such as LPG, LNG, and CNG. The Latin American market is expected to show an attractive growth rate over the coming years, owing to its large rural population urban expansion.
Global Diesel Fuel Market: Key Players
Of the large number of players present in the global diesel fuel market, some of its leaders so far included Total, Exxon, Valero, Conoco Philips, and Shell.
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