Hi Jody, I would check out this link that describes many symptoms of diseases/fungus on citrus tree trunks http://ipm.ucanr.edu/PMG/C107/m107bptrunkrootdis.html

most people won't be able to help guess what's wrong with your tree without more specific information like temperature, watering schedule, location in your yard etc

try looking at the "phytophthora" symptoms and see how they suggest checking for signs of infection. I don't have personal experience with peeling bark on my citrus so the link I'm referring is what I check if it were my tree

It certainly looks like the beginnings of Foot Rot, caused by Phytophthora megasperma, This is a serious disease and you need to get on top of that quickly. There is a lot of information on the Internet about control. Or you can contact you county agricultural agent.

Thank you all for your thoughts, very helpful! After some research I believe Silica is correct, it's likely foot rot. http://idtools.org/id/citrus/diseases/factsheet.php?name=Phytophthora  

I'm now researching treatment, suggestions welcome!

Agrifos seems to work as well as anything.

Silica - you're recommendation to contact my county agricultural agent was so helpful! Here's what they said:

I believe your grapefruit tree has citrus psorosis virus (CPsV). If this is the case, then the tree has had this virus its entire life. It may not have been obvious until now because it is the type of virus that can be dormant and then emerge. The severity of symptoms can also vary from year to year depending on how healthy or stressed the tree is. This type of virus tends to take advantage anytime the tree is in a weakened state. It is not curable. As the tree ages and becomes weaker, it will not be able to defend itself against the virus.

General information about the disease:

http://idtools.org/id/citrus/diseases/factsheet.php?name=Psorosis

http://ipm.ucanr.edu/PMG/r107100100.html

While it is not curable, there may be some things you can do to help support the tree's health and prolong it's life and fruit production. If you are interested in learning how to manage your tree's disease, I would reach out to a specialist who can assist you. You can also research the disease on your own and attempt treatment.

Information about treatment:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4188200/

http://fshs.org/proceedings-o/1929-vol-42/110-118%20(RHOADS).pdf