Gents, I would like to offer a few comments demulsify means help the water separate from a diesel/water emulsion to allow it to setlle out and prevent it from being burned in the engine if you have a modern diesel engine with a very high pressure common rail fuel injection system it is my understanding that all knowledgeable recommendations are not to attempt to emulsify the water with the fuel and burn it.  The fear is both the corrosion the water might cause and the loss of lubricity the emulsified water/diesel blend has and its risk to the high pressure fuel pump. With an older mechanical injection engine it may be fine to burn an emulsified mix of water and diesel.  I don't have specific knowledge of recommendations one way or the other on these but do know they are a more robust, less sensitive system than the high pressure common rail systems.  For that robustness you give up some efficiency and get a dirtier exhaust. Like all things, the quantity and  frequency is probably key to what will do harm, as well as the system your engine has.  I do believe best practice is separate the water, draw it off manually from the tank and/or via a water separator separate or built into the fuel filtration system.  Each year I get a tablespoon or so from each of my Racor filters and it seems to be about the same whether that engine consumes 50 or 300 gallons that year. One of the main drawbacks of water in the fuel is that it does allow nasty bacteria to grow at the diesel water interface and they can produce H2S which is highly corrosive and can cause problems in steel tanks. I vote for burning diesel and separating the water from it before you do so and draw it off the tank and/or the fuel filter assembly. Merry Christmas and Happy, Safe and Prosperous New Year to all Gary Hagstrom