Diesel is Still Going Up in Price

[PDJetta]

I read this Wednesday the Energy Industry Aliance report showed a substantial build up of distillate inventories (3 times what was anticipated) and a substantial fall in the gasoline stocks, more than predicted. The article indicated that the refiners were making an earlier-than-normal switch to increased distallate production during the height of the driving season (for fear of being short this winter) when gasoline use is the highest. Such an early move to switch production was unheard of before.

Well, yesterday I noticed that diesel went UP in price from $2.35 to $2.41 a gallon at the Hess I use. Reg. unleaded went up to $2.15 a gallon from 2.07 a gallon. I also know oil was trading at about $58.50 a barrel Friday, the highest price ever, even though world stockpiles of crude are at their HIGHEST level ever. Refinery capacity (lack of) seems to be the major problem, not lack of crude oil. But why does that make crude more expensive? Seems to me that crude prices should fall quite a bit if stocks build because of lack of refinery capacity.

My thought is that just since gasoline is anticipated to be in shorter supply and went up in price, the oil companies automatically raised diesel by the same number of cents per gallon, roughly, to make more money or to offset the less profit they make on gasoline.

Its interesting to note that the price of gas and diesel at the pump increases within hours of an increase in crude price and may take days or weeks to fall when the price of crude falls on the world market.

--Nate

 

[Dweebus]

My wife heard a similar bit on NPR about refineries producing diesel and HHO. Yet, as you noted, the price of diesel has gone up here too (Vermont). The local station went from $2.35 to $2.50. $2.50 seems to be about the nomal price now. Unleaded is around $2.15. Diesel hasn't been cheaper than gas since atleast last fall (since I've been watching) around here. I'd rather be burning biodiesel anyway, so I'm not sure I really care, excapt that bio retailers seem to adjust their prices somewhat based on petrol prices.

 

[TornadoRed]

Its interesting to note that the price of gas and diesel at the pump increases within hours of an increase in crude price and may take days or weeks to fall when the price of crude falls on the world market.

Crude prices did not suddenly increase, they have been climbing steadily since bottoming out in early May. Crude is now nearly $10/barrel higher.

So prices at the pump, which have risen about 12-15 cents per gallon around here, are almost certainly going to go up by at least that amount from current levels.

 

[Old Navy]

It seems that diesel is staying about 10% above the price of gas in most parts of the country.

A Wal-Mart in Dexter MO is selling regular gas for $1.87 and with 3 cent discount if you pay with Wal-Mart Gift Card or Wal-Mart Card while other stations are at $1.96, diesel is however about the same as other stations around $2.19 per gallon.

 

[PapaBare]

Diesel fuel in Regina, SK is $84.9 to $87.9 a liter.
Gasoline is $91.9 a liter.
I just read that crude oil is upto about $59 a barrel and some analysts are predicting upto $70 a barrel this year due to the unrest in Nigeria.
Maybe fuel will get up to $3.00 a gallon in the US this year..

 

[PDJetta]

Diesel fuel in Regina, SK is $84.9 to $87.9 a liter.
Gasoline is $91.9 a liter.
I just read that crude oil is upto about $59 a barrel and some analysts are predicting upto $70 a barrel this year due to the unrest in Nigeria.
Maybe fuel will get up to $3.00 a gallon in the US this year..

I sure hope so! Maybe that will get some of those mamouth SUVs off of the road. I just do not like seeing diesel cost more than gas.

--Nate

 

[Jwagen04]

Diesel fuel in Regina, SK is $84.9 to $87.9 a liter.
Gasoline is $91.9 a liter.
I just read that crude oil is upto about $59 a barrel and some analysts are predicting upto $70 a barrel this year due to the unrest in Nigeria.
Maybe fuel will get up to $3.00 a gallon in the US this year..

I sure hope so! Maybe that will get some of those mamouth SUVs off of the road. I just do not like seeing diesel cost more than gas.

--Nate

Let's NOT hope so. High gas prices help no one, at least not the average joe. Let's remember too that there are large families that need a large vehicle, like mine, that shouldn't have to apologize to anyone for driving a Suburban or 12-15 passenger van. We don't buy them cuz they’re popular. We buy them because they are practical and had them long before the craze began. That SUV next to you just might be a diesel too, like my father's last two Suburban’s have been.

 

[SUNRG]

i hope fuel prices rise (diesel and gas equally).

GM can make a suburban 30% more fuel efficient but it costs a bit more to do - so the don't.

i'm OK with SUVs, but automakers can and will do better when it comes to economy if the market demands it (or if CAFE were raised, or if CAFE included SUVs).

 

[Muggins]

there are large families that need a large vehicle, like mine, that shouldn't have to apologize to anyone for driving a Suburban or 12-15 passenger van. We don't buy them cuz they’re popular. We buy them because they are practical and had them long before the craze began. That SUV next to you just might be a diesel too, like my father's last two Suburban’s have been.

As far as I'm concerned, a large conventional van or mini-van serves the purpose. SUVs are strictly a status symbol.

 

[cp]

I sure hope so! Maybe that will get some of those mamouth SUVs off of the road.

While you may have the smug satisfaction of seeing some SUV's parked, by and large they will still rule the road. Reason? The people who own many of them can afford gas regardless of what it costs. So what if the fuel bill doubles or even triples...it's chump change.

The people who will be hurt are the rest of us dumb schmucks who don't make $300k and up per year, and businesses. Not only will you be paying more at the pump, you'll be paying more for each and every purchased good you buy. $3 fuel will wreck what's left of the economic recovery.

 

[swartzentruber]

Well cp, I'd say you are wrong.

Sagging SUV sales cited as major factor behind Ford's stalled turnaround

 

[cp]

Yeah...look at the sales of their high-mpg subcompact line....really booming, as compared to the SUV's. It would appear the only things they have that anyone is interested in are F150's and Mustangs, neither of which is particularly fuel efficient. Plus, how about them sales figures at VW, eh? Their fuel efficient line is really pulling in the customers. As I drove home tonight in an 85mph herd, I noticed a lot fewer SUVs on the road...like, maybe one. I dunno, though...once you count past a thousand, it's easy to lose track.

 

[SUNRG]

$3 fuel will wreck what's left of the economic recovery.

$3 fuel is not a possibility, it's definitely on its way. the only question is how soon. in the short term it probably will have a negative impact on the US economy.

but, we as a country will "re-tool" and come back stronger, more self-reliant, and IMO better than ever.

as a country, the US needs to use energy more efficiently, use less energy and produce more energy (via renewables).

IMO - every energy policy on the table moves us in this direction insufficiently and too slowly - so the global market / economy is going to shove it down our throats.

consider the Honda / Toyota economic models. no one forced them to make cars more reliable, safer for passengers and pedestrains, more fuel efficient and cleaner. they are proactive in every area of automotive development. the US economic model is reactive - with reactions that are too slow and insufficient.

 

[TornadoRed]

consider the Honda / Toyota economic models. no one forced them to make cars more reliable, safer for passengers and pedestrains, more fuel efficient and cleaner. they are proactive in every area of automotive development. the US economic model is reactive - with reactions that are too slow and insufficient.

I generally agree with your major point. But here you are comparing apples and oranges. Honda and Toyota do not have economic models, they have business models which take the macroeconomy as a given. Compare them with GM, if you will, or Ford. But not with the US govt/economy.

You could say that Honda and Toyota have guessed right about the direction of fuel costs, and the resulting change in consumer preferences. Or that GM and Ford have ignored a tremendous amount of evidence that the consumers' enthusiasm for gas-guzzlers was waning. Perhaps they figured that, if they were making $6k-$10k in profit on each SUV, if demand softened they could get it back with $1k-$2k in rebates. But every company cannot do this at the same time. So the discounts get bigger. And the bigger the discounts, the bigger the hit on resale value, making used vehicles more attractive.

Regarding US govt policy, it seems to be going in the right direction: increase production of all kinds of energy, wherever possible. Oil, gas, coal, nuclear, ethanol, biodiesel. The laws that actually implement this policy are going to be ugly, no question about that, but that's how laws are made. There are contradictions, too, like the bans on off-shore drilling in some of the richest oilfields, because we don't want to watch the sun setting behind the offshore rigs and terminals. And I don't see a sufficient sense of urgency regarding the shortage of refining capacity. NIMBY?

 

[katipo]

The hard part will be in areas of the country that has no choice but to drive to where you are to go. Out here in the middle of the red states you can sit on the edge of town and for as far as the eye can see, all you will see is tumbleweeds and jackrabbits. The nearest town to Amarillo is 18 miles away, and the nearest SIGNIFICANT city is a little under 200 miles from the two courthouses. So...unlike some areas where public transportation is readily available, it ain't out here!!

Glad for the TDI I can do a bit of traveling without carrying the value of a second mortgage around with me.

 

[cmitchell]

Same story here on the western edge of Blue State territory. We drive 50 miles (one way) for groceries, doctor, dentist, etc...

 

[cp]

That must make for some long lunches for the Pantex folks.

 

[Ramsey]

While I am a country boy at heart, having grown up in Western Montana (Kalispell), I have no problem with small towns disappearing and movement back to urban areas. Properly implemented urban growth can lower crime, birth rates, and free up the countryside for us off road mountain bikers. I just moved to Madison last year, and this is the smallest city I have ever lived in that did not require you to own a car. I live near the suburbs and bike in to work/schooh, it is 7.7 miles and takes a little over 26 minutes (I ride a full suspension giant, I need something for commuting). I can get to a grocery store or my other job in less than 15 minutes. I still would love to live farther away from people, but it is not necessary, and I hate trying to track down the owner of land to ask permission to bike.

As evil as it sounds, this is one of the few economic areas where government intervention is desirable, to protect us from externalities like pollution and sprawl. Me and my wife will be hard pressed to afford it, but fuel for commuting should be taxed to hell. Let the commercial guys have a bit of a break though, on their end of the year tax returns, and only for necessary fuel usage.

 

[cp]

Were you like that before you got to Madison?

 

[gbangs]

We can argue all day about SUV's, urban growth, and the price of oil, but the question remains...

Why is diesel MORE expensive than gasoline?
And why aren't the truckers complaining about it?

 

[nicklockard]

And why aren't the truckers complaining about it?

Hmmm, talk to some truckers the next time you fill up or stop at a rest stop and ask them what they think about it.


It might have something to do with >95% of all popular media being owned by 6 companies...that you don't hear unpopular opinions.

 

[cp]

Why is diesel MORE expensive than gasoline?

Diesel is no longer the easily-refined commodity that it once was, thanks to sulfur restrictions. We got cleaner air--it didn't come without a price.

 

[Old Navy]

Shortly after buying my Dodge Magnum last December I posed the question to the V8 Magnum owners what effect if any would $3 a gallon gas have on the onership of their hot rod station wagons. About 95% replied that it would have no effect on the useage or potential to buy the 425hp version when it became available. So it seems as long as those people who can afford their gas hog SUV's and gas sucking sport cars and sedans they will continue buying them.

The current thinking of TV pundits is gas will have to hit $4 a gallon to have any real impact on the buying habits of the American car buying public.

 

[AndyBees]

I have been driving VW diesels since January of 1980. This is the longest time I have ever seen diesel prices higher than gasoline. Typically, its only during the winter months.

As for the SUVs, well, I have owned mine since 1995. We use it for those things that a bicycle, go-cart, sub-compact, compact, etc., will not do. We have only driven it 51k miles. We drive the speed limit and on the road it averages over 22 mile per gallon.

So, IMO, not all SUV owners deserve to be criticised over the guzzling issue.

My two cents worth.

 

[PDJetta]

The problem is that diesel demand is running at 6.5% greater this year than the same time last year (gasoline damand is up only 2.5%) AND the oil refineries are maxed out in throughput and can not produce more fuel (gasoline and diesel). Now, refineries have to trade production of one fuel at the expense of creating a shortage in the other. If we want cheap diesel, more refineries have to be built.

What compounds the problem is that China is begining to use a sizeable amount of fuel. World fuel damand is going up.

There is NO shortage of crude oil. Crude inventories are at their all time high. There is beginning to be a shortage of refined products, distallates especially. There IS an anticipated shortage of distallates for this winter and that really drives the price up on the futures contracts. Home Heating Oil was recentely trading at a 11 cent unheard of premium to unleaded gas. Its now at 2 cents over unleaded. Historically, heating oil has been priced less than gasoline on the futures market.

I'm just thankful I do not heat with oil! The yearly required furnace maintenance bill is bad enough for oil burners and that is why three years ago I selected a house heated with natural gas! I sure did not anticipate this price hike, although natural gas has risen in price substantially too.

--Nate

 

[Thunderstruck]

Can home furnaces be run on BioD rather than heating oil? That would be a darned good way to 1) help American farmers 2) decrease demand 3) feel better about your choice of fuel

I ask because there is a place here that is going to be selling BD from recycled veggie oil. I'm not going to put it in my car, but it could be appealing to furnace owners.

 

[DrStink]

Regarding US govt policy, it seems to be going in the right direction: increase production of all kinds of energy, wherever possible. Oil, gas, coal, nuclear, ethanol, biodiesel. The laws that actually implement this policy are going to be ugly, no question about that, but that's how laws are made.

Respectfully TR, I must disagree. We are NOT moving in the right direction.

A supply-side only solution is doomed from the outset. We cannot drill our way out of this problem, either figuratively or literally.

Unless we address demand, we're just spinning our wheels.

 

[DrStink]

As evil as it sounds, this is one of the few economic areas where government intervention is desirable, to protect us from externalities like pollution and sprawl.

Sounds to me like you should read Natural Capitalism if you haven't already.

http://www.natcap.org/sitepages/pid5.php

 

[DrStink]

Can home furnaces be run on BioD rather than heating oil? That would be a darned good way to 1) help American farmers 2) decrease demand 3) feel better about your choice of fuel

Short version is yes, although you you might need different nozzles if you aren't running a blend from what I've heard on the the JtF biofuels mailing list..

15 seconds with google turns up the following:
http://www.motherearthnews.com/library/2003_December_January/Heat_Your_House_with_Biodiesel

I'm not going to put it in my car, but it could be appealing to furnace owners.

Why not?

 

[DrStink]

If we want cheap diesel, more refineries have to be built.

Well, mandating a national B2 or better yet B5 blend would be a good place to start too.

If a new refinery really costs a couple billion dollars, you can certainly build a heck of a lot of smallerbiodiesel plants for that kind of money, and have a much smaller ecological footprint while you're at it. And they're geographically distributed, which increases the opportunity for job creation and much safer in terms of homeland security.

Fulton NY is getting a new 5 million gallon a year BD plant for less than $100k.

Does anybody know how much the 3.6million gal/yr plant in Western MA cost?

Asusming my math is correct and the Fulton plant is representative, which may not be good assumptions, 2 billion dollars could build twenty thousand 5 million gal a year plants which would produce about 100 billion gallons of BD a year. That's about 1000 times the current amount of BD produced annually in the US.

Clearly, this is a gross oversimplification, but it certainly provides an interesting context for our President's aggressive support for new refinery construction.