Volume X, Issue 5, Page 31

NEWS & ANALYSIS

Nitro shortage? Depends on whom you ask.

As part of my research for this story I contacted VP Racing Fuels president Steve Burns and asked for his take on the issue. I received this Q and A from him generated by the communication department at VP.

Q. Is there currently a nitromethane shortage?

A. Yes. As you know, Angus Chemical withdrew their nitromethane product from the racing market over a year ago, so they’re off the table. As for manufacturers in China, they’re experiencing production problems for several reasons. There is a severe shortage of feedstocks required to make the nitromethane, with no relief expected until later in the fall. The Chinese government is also placing restrictions on nitro manufacturers and others such that no production can occur near and during the timeframe of the Summer Olympics. In addition, the government is placing restrictions on shipments into and out of their ports during two significant time periods this summer. Some production has been impacted by the recent earthquake. 

Q. Will nitromethane be available this season for all segments of racing that require it?

A. No – not from VP. We are confident that VP will be able to supply sufficient quantities of nitromethane to NHRA Championship Drag Racing national events for the duration of this season. We feel a responsibility to provide this supply for NHRA and we take it very seriously. We recognize many jobs — from race teams to parts manufacturers to food vendors and parking lot attendants — are dependent on these events and we will do whatever is necessary to make sure these events occur. The fact is VP actually sells more nitromethane for industrial and hobby fuels annually than it does for racing. This year, we have dropped about 95% of our industrial and hobby business to ensure NHRA’s supply is uninterrupted. This will have a significantly negative financial impact on VP.

Q. Is it reasonable to think anyone who needs nitromethane will be able to get it if they’re willing to pay a high enough price?

A. No, not from VP. On the subject of price, due to the current supply situation, the price that VP pays for nitromethane has literally doubled in the last eight weeks. In addition to increased price, new restrictions on a number of hazardous substances, including nitromethane, has increased VP’s cost of handling nitro. Racers can expect to pay higher prices for any nitro they’re able to obtain. I suspect that some very questionable quality nitromethane will enter the market. Please be cautious.

Q. When can we expect the shortage situation to improve?

A. Speaking only for VP, we are reaching around the world to ensure long term quality supply. We are gaining confidence each day that we’ll be able to honor our commitment to NHRA this season. We expect by the 3rd or 4th quarter of this year, we will have sufficient quantities to satisfy some of the demand beyond NHRA. By next season, we expect to have sufficient quantities for most segments of racing, in part because we’re committed to stockpiling sufficient inventory to satisfy demand regardless of sporadic shortages. As you might expect, the increased cost of this effort will put pressure on prices, but at least the product will then be available to those that need it.

Q. Is there more to this supply shortage than just the problems in China?
 
A. YES, absolutely. In addition to the situation in China, our efforts to secure a supply of nitromethane this year have encountered other obstacles that have been extremely frustrating for us and made the situation more difficult than it needed to be. When the time is right, the entire story will be told, and it will be very interesting.

Recently there has been a lot of concern in the world of drag racing over a possible shortage of nitromethane. This is no small issue since both the NHRA and IHRA plus various other series such as the Texas-based Fuel Altered circuit, the Hot Rod Heritage circuit and others are dependent upon the availability of nitromethane for those series to be successful.

The problem is that the official supplier for the NHRA, VP Racing Fuels, evidently is having problems getting enough nitro to meet not only the demands of NHRA drag racers but also supplying other larger and smaller markets that use the chemical. 

Part of the problem is the increasing difficulty for anyone to get nitro shipped from China to the U.S. in large quantities. A contributing factor is the withdrawal of Dow/Angus as the sole U.S.-based manufacturer and supplier of nitro for racing a few years back, causing all nitro used for auto racing to be imported from mainland China.

Reportedly, Torco Racing Fuels, which is the official supplier for the IHRA, the MacMonagle family, who are the official suppliers for the AHDRA, and VP Racing Fuels have recently taken delivery of 80-drum containers of Chinese-manufactured nitro to meet those series’ requirements, but nevertheless racers remain concerned regarding the supply of nitro for the 2008 racing season. 

The nitro racers’ paranoia wasn’t helped when NHRA’s Steve Gibbs posted a note on the Standard 1320 bulletin board saying there was no official supplier of nitro for the NHRA-backed Hot Rod Heritage circuit or the “cackle cars” and that those racers would have to find their own nitro.

Apparently the real problem isn’t having nitro for the near future but rather in four to six months. The fact is that the Chinese government is in the process of restricting ports such as Singapore from shipping out Hazmat materials and is shutting down some factories that make nitromethane in order to meet the environmental requirements for that country to hold the upcoming Summer Olympics.

The reality is that there are at least two sources that currently are known to have stockpiles of racing grade nitro: Don Schumacher, who, although he is no longer in the nitro sales business, has a large supply warehoused as well as containers of nitro on boats on their way to the states, and VP Racing Fuels.

A third source could be the Wego Company, which Schumacher says has its own nitromethane factory on the China mainland and apparently has no issue making and shipping nitro to the states. In the past Wego has supplied various U.S. distributors with nitro.

Reliable sources tell me that there is a good chance that NHRA will allow a second supplier of nitromethane to be named. That second group would probably be connected with the Wego Company and, according to Don Schumacher, both he and Steve LeSeur would be involved. I had a conversation with Steve Scheidker at VP and came away with the impression that VP wanted to find a solution and didn’t have a problem working with Don Schumacher to try and resolve the issues.

The bottom line is this. As long as the price of nitro keeps going up and the NHRA and IHRA continue to use nitro-burning cars as their main attraction there will be problems. One problem is that in order for the supply of nitro to go uninterrupted. the NHRA, VP Racing Fuels, Don Schumacher’s group and the Wego Company are all going to have to sit down and work out their issues. I’ve been told that is already happening through back channels and that all the parties want that to happen, but recent published statements from one of the principles in Competition Plus may have caused some problems.

After my conversations recently with Don Schumacher I am convinced that he is sincerely looking for a solution to the nitro problem. It is in his best interest as a mega-team owner in the NHRA for there to be no event stoppage because of lack of nitro. Racers, sponsors, and sanctioning bodies all have vested interest in keeping nitro racing alive and healthy.

A combination of demand for and the cost of manufacturing and shipping nitro will keep driving the price of nitro higher; there is no escaping that. Schumacher told me that in the past he was being charged around $2,000 a metric ton for nitro but the latest quotes he has gotten has seen that price more than doubled to around $5,000 a metric ton.

My opinion is that if the price of nitro gets high enough Dow/Angus may return to making and selling nitro in the U.S.

Keep in mind that back in 1987 nitro racers were paying $1,500 for a 55-gallon drum of 100 percent nitro. That is $1,500 in 1987 dollars. Factoring for inflation, nitro today is still cheaper than it was 20 years ago. 

Like it or not, whether you burn $10-a-gallon race gasoline, $3-a-gallon methanol, or $30-a-gallon nitro in your street or race car, you’ll be paying more for it for a long time to come.

As any junkie can tell you, his only problem with his drug of choice, whether heroin or nitromethane, isn’t the cost but the availability. How much will you pay to cackle your toy or fill the tank of your race car? We haven’t reached the point where it’s too expensive…yet.