The price of the Tier 3 gasoline sulfur credit hit $3,600 in October, up by a factor of 10 since 2022 and roughly in line with the all-time high reached in 2019. The high price of this important credit is a direct indicator of the true cost of compliance with the Environmental Protection Agency’s (EPA) Tier 3 gasoline sulfur standard and has raised some alarm recently in refining and financial circles. In today’s RBN blog, we give some specific examples of how refiners and investment analysts are reacting.
The Future of Fuels bi-annual report by RBN's Refined Fuels Analytics provides an in-depth analysis of the U.S. and global refinery industries, focusing on crude oil and fuel market dynamics, supply and demand, alternative fuels, refinery capacities, and price forecasts to help stakeholders navigate the evolving energy landscape.
The Tier 3 story is about two tightly coupled gasoline quality specifications: sulfur and octane. Many U.S. refineries are unable to desulfurize gasoline down to 10 parts per million (ppm) without also significantly downgrading the octane of their gasoline pool. (As we’ve noted previously, octane is the primary yardstick of gasoline quality and price.) This has become a critical new bottleneck in gasoline production in North America that is reducing gasoline supply, increasing prices and affecting refiners’ profitability. One year ago, our four-part Breaking the Chains series told the full Tier 3 story, first by explaining octane and gasoline blending (Part 1), then the octane/sulfur bottleneck (Part 2), the alternatives available to refiners (Part 3), and the sulfur credit system (Part 4).
Figure 1. U.S. Average Sulfur in Gasoline in Parts Per Million. Source: EPA
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About the song
“Welcome to the Future,” co-written by Brad Paisley and Chris DuBois, was the second single from Paisley’s 2009 album, American Saturday Night. The song reached #2 on Billboard's Hot Country Songs chart and #42 on the Billboard Hot 100. Paisley was quoted as saying, “I wanted to show this world through my eyes, my kid’s eyes, and my granddad’s eyes, with this look of hope.” He performed the song for President Barack Obama and First Lady Michelle Obama in the East Wing of the White House in 2009.
Brad Paisley is an American singer/songwriter/guitarist born in Glen Dale, WV, in 1972. In 1995, Paisley received a full scholarship from ASCAP (the American Society of Composers, Authors and Publishers) to Belmont University in Nashville. After graduating with a B.A. in music business, Brad got a publishing deal with EMI Music Publishing, also in Nashville. He started his recording career with the release of his first album, Who Needs Pictures, in 1999.
Paisley has released 13 studio albums, three compilation albums, and 49 singles. He has sold more than 11 million records worldwide and has had 21 #1 singles. He has won two American Music Awards, 14 Academy of Country Music Awards, 14 Country Music Association Awards and three Grammy Awards, and is a member of the Grand Ole Opry. He has appeared on several television shows and is a spokesperson for Nationwide Insurance in their television ads. He continues to record and tour and will begin his Son of the Mountains World Tour 2024 in February 2024.
