At Dimitris Poliviou’s car repair shop, customers are increasingly turning up with diesel-powered vehicles.
“There are loads and loads of them,” Poliviou said as his crew in the Belsize Park neighborhood worked on a diesel Volkswagen Passat.
The statistics bear him out. Over the last quarter-century, European drivers have embraced diesel cars, as they tried to save money in a region of high-priced fuel. More than half of the new cars registered in Western Europe last year were diesel powered, compared with only about 1 in 10 in 1990. In comparison, only about 3 percent of new cars in the US are diesels, according to market researcher IHS.
Photo: Bloomberg
That is why Exxon Mobil, the biggest US oil company, is trying to take advantage of the diesel boom to bolster its struggling European refining business. As fuel refining has eroded into a money-losing proposition for most European players, Exxon Mobil is making a contrarian bet, with a plan to invest more than US$1 billion in expanding diesel-fuel production at its big refinery in Antwerp, Belgium.
Steve Hart, Exxon Mobil’s head of refining for Europe and most other regions outside the US, said in an interview this week that the company was taking a long-term view in betting on diesel to reinvigorate its refining operations.
“If you look at Europe, demand for diesel continues to increase, and demand for gasoline is decreasing,” he said.
European carmakers like Renault and Volkswagen have responded to changing customer tastes with new diesel designs that have helped make diesel even more popular, through changes like adding turbo chargers to smooth acceleration.
However, fuel suppliers in Europe, because of the expense of converting refineries, have been slower to adjust. Many find themselves awash in gasoline, for which there is diminishing demand.
Hart also suggested that Exxon Mobil was considering diesel investments in other locations in Europe, where the company has nine refineries and is second largest in the industry, after the French giant Total.
From its network of refineries in northwest Europe, Hart said, Exxon Mobil will collect heavy fuels for which there is no longer much demand — like the so-called bunker used by older ships — and carry it by boat to Antwerp. There, a new refinery unit will distill the gooey substances into diesel and a similar lighter-weight fuel used by more modern ships. The company will then sell the diesel in northwestern Europe, which now imports large quantities of the fuel from the US, the Middle East and Russia.
Exxon Mobil is trying to catch up with a powerful trend that was initially encouraged by lower taxation on diesel cars and fuel, and then grew with big improvements in European auto design.
“People prefer the power delivery with diesel — they feel a lot quicker,” said Luke Madden, news editor of London-based Web sites Auto Express and Carbuyer.
Madden said diesel cars achieved substantially more miles (1.6km) per gallon (3.79 liters) than their gasoline-burning counterparts. That is particularly important in European countries, including Britain, where gasoline costs about US$8.50 a gallon and diesel about US$8.80, compared with about US$3.70 for gas and about US$3.90 for diesel in the US
Madden and Poliviou cautioned that diesels have drawbacks. For instance, diesel cars need to be driven regularly and at a fairly high speed to clean the filters that catch the soot and other particles their engines produce. In cars used only for stop-and-start city driving, those filters can gum up and cause problems.
The big shifts in the European auto fleet have caused huge changes in fuel consumption. Car and truck drivers in the EU now burn more than 2.5 times as much diesel as they do gasoline. A decade ago the use was even.
Those changes have left European refiners with a product mix too skewed toward gasoline — creating a glut of fuel that is increasingly difficult to export to the US because North American refineries can produce it themselves at a lower cost. Many European refineries are thought to be losing money because of sluggish gasoline demand in Europe and competition from imports coming from the US and new facilities in the Middle East. Unlike Exxon Mobil, many are reluctant or unable to make the big investments needed to adjust to the new environment.
Robert Campbell, an analyst at Energy Aspects, a market research firm, figures that the smaller European refineries are losing US$4 to US$6 a barrel on the oil they process, while larger refineries may be making a razor-thin profit of US$1 to US$2 a barrel.
Refiners have thought that “because European oil demand is going down, there is no reason to invest in refineries,” he said.
However. Exxon Mobil, with its deep pockets, is doing what it thinks is necessary to continue as a European player.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
Clambering hand-over-hand, sweat dripping into his eyes, a durian laborer expertly slices a cumbersome fruit from a tree before tossing it down to land with a soft thump in his colleague’s waiting arms about 15m below. Among Thailand’s most famous and lucrative exports, the pungent “king of fruits” is as distinctive in its smell as its spiky green-brown carapace, and has been farmed in the kingdom for hundreds of years. However, a vicious heat wave engulfing Southeast Asia has resulted in smaller yields and spiraling costs, with growers and sellers increasingly panicked as global warming damages the industry. “This year is a crisis,”
HIGH-TECH: As leading-edge process technologies become more complicated, only a handful of players are able to provide design services, the company’s CEO said Artificial intelligence (AI) chip designer Alchip Technologies Ltd (世芯) yesterday said that revenue would grow significantly again in 2026 after adding a major AI chip customer, reversing moderation amid a product transition next year. The Taipei-based application-specific IC (ASIC) designer reiterated its strong revenue growth forecast for this year and 2026 after its stock plummeted about 23 percent to NT$3,145 from a peak of NT$4,085 on March 6 amid growing competition. Alchip said it has built strong partnerships with cloud service providers (CSP), denying that it had lost orders to smaller competitors such as Faraday Technology Corp (智原). Faraday said it has secured