Voss Companies owns and operates 3 truckstops in the Midwest, along with a small chain of convenient stores. We employ 275 people throughout our operation, and sell approximately 45 million gallons of diesel fuel at retail every year.
With over 26 years of personal experience in the truckstop industry, I appear before the Subcommittee today on behalf of NATSO, the national trade association representing the travel plaza and truckstop industry. NATSO represents nearly 400 companies, which operate approximately 1,200 travel plaza and truckstop locations nationwide.
As the primary retailer of highway diesel fuel, the truckstop industry is a vital link in the transportation of goods and services throughout our country. The vast majority of our nation's products are delivered by diesel powered vehicles; everything from the clothes we wear to the food we eat. Our nation's travel plazas and truckstops are a critical link in the movement of these goods, providing the fuel needed to keep these trucks, and our economy, running smoothly.
In an effort to improve air quality, EPA has proposed that the sulfur content of all highway diesel fuel sold to consumers be reduced from its current level of 500 parts per million to just 15 parts per million beginning in 2006.
While the travel plaza and truckstop industry supports efforts to reduce emissions, NATSO has serious concerns and objections with EPA's proposed diesel sulfur regulation and the effect it will have on our nation's energy supply and delivery system. As proposed, EPA's rule will reduce overall supplies of diesel fuel, lead to significant spot outages, and significantly increase the cost of diesel fuel and other distillates.
NATSO is very concerned that this drastic 97 percent reduction in the sulfur content of highway diesel fuel will seriously disrupt the truckstop industry's ability to consistently and reliably acquire highway diesel fuel for sale in our nation's vehicles.
The investment which refiners will need to make in order to reduce sulfur levels by 97 percent may force many refiners to opt out of the highway diesel market and instead focus on other market segments for product production. Further, some refineries may cease operations altogether. With our nation's current fuel supply strained as it is, the loss of any additional diesel production and supply would be devastating.
Additionally, due to its integrated structure, it does not appear that our nation's diesel fuel distribution system could maintain ultra-low sulfur highway diesel fuel supplies in all areas of the country on a reliable basis. This serious problem could lead to fuel cross-contamination, spot outages of highway diesel fuel, and severe price spikes.
Furthermore, under EPA's proposed 97 percent reduction in sulfur levels, domestic highway diesel fuel will have a lower sulfur level than highway diesel fuel produced in most other nations. This would essentially prohibit the influx of foreign supplies of diesel fuel which could otherwise be used to ease shortages in domestic production and supply.
Ultimately, under EPA's proposal, less diesel fuel will be produced and supplied, driving up prices and costs, and endangering the integrity of our nation's energy supply and delivery system.
Truckstop operators - a critical link in the movement of goods and services throughout our nation - must be able to reliably acquire diesel fuel for re-sale to not only remain a viable and important part of our nation's fuel delivery system, but to ensure that adequate supplies of diesel fuel are available to power our country's vehicles.
EPA, in a misguided attempt to address the problems which would result from the extreme sulfur reductions proposed, has sought comment on various phase-in schemes which would result in the temporary manufacture, sale, and use of two separate grades of highway diesel fuel. These scenarios would allow the current 500 parts per million highway diesel to continue to be produced alongside the new ultra-low sulfur diesel for a period of years until it is eventually phased out in favor of the new ultra-low sulfur fuel.
NATSO is strongly opposed to these phase-in schemes, as they would prove devastating to the entire diesel fuel distribution system, including travel plazas and truckstops, while having the net effect of further reducing the supply of diesel fuel available at retail.
It is critical to note that the entire diesel fuel delivery system, from refinery to retail, is currently handling a single grade of highway diesel fuel. Because the travel plaza and truckstop industry is also configured to carry a single grade of highway diesel, the introduction of a second separate grade would force the truckstop industry to make tremendous capital investment to carry both products at retail.
Significant expenditures, over $100,000 per location in many cases, would need to be made to ensure that these separate grades of diesel are properly segregated to prevent their cross-contamination, and to avert misfueling at the pump. This would result in the need for new storage tanks, the re-piping and re-manifolding of tank lines, new pumps and monitors, and other significant compliance expense. In many cases, the permits for such a mandate would be unattainable.
Furthermore, these costs, which would be borne by an industry which largely consists of small independent owner/operators who are still recovering financially from the 1998 underground storage tank upgrades, would prove to be unrecoverable due to the temporary nature of the two fuel system.
The introduction of a second grade of highway diesel could therefore force many truckstop operators out of business, and have the additional effect of further reducing diesel fuel supply.
NATSO urges the Subcommittee to express to EPA your opposition to these phase-in schemes which would result in the temporary manufacture, sale, and use of two separate grades of highway diesel fuel. These phase-ins will place at risk the integrity of our nation's diesel fueling infrastructure, raise costs throughout the distribution chain, and reduce overall supplies of highway diesel fuel.
NATSO does support efforts to improve our nation's air quality without placing our energy supply and delivery system at risk. The petroleum industry has stated its support for a 90 percent reduction in sulfur levels from 500 parts per million to 50 parts per million. Such a reduction, if it occurs without a two-fuel phase-in scheme and with sufficient lead-time for refiners and emission control manufacturers, would achieve significant reductions in emissions, while maintaining the integrity of our nation's diesel fueling infrastructure.
On behalf of NATSO and the truckstop industry, I again thank the Subcommittee for holding this important hearing. I would be happy to answer any questions from the Subcommittee.