DieselFuel

sidsnot

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So why now is diesel fuel more expensive than regular gas?. Based on the fact that diesel is less refined than gas, why has the price gone up. In the 15 years that I have been driving VW diesels I have watched the price grdually go up until now it cost more thas gas. I have traveled both here in Alberta, weat into B.C. & down in to western US & found much the same. It seems to be going much the same way as propane. Any one have the answer?
 

maxforce

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Simple supply and demand, Winter people travel less and want to stay warm at home. Summer people travel more and want to stay cool at home. More fuel for warm less gas for travel and more gas for travel and less fuel for warm.
 

philh

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It is supply/demand related to the different markets and their liquidity (ability of one region's product to be transferable to another region). I cannot comment about Canada, but the U.S. is seeing huge regional differences in the West Coast and Pacific Northwest compared to Gulf Coast and Midwest. By and large, fuel is barged to the WC and PNW, which is expensive.

These demand shifts affect gasoline prices even worse. Seasonal RVP requiremens and other peculiarities (oxygentate) make the West Coast the most prone (least liquid).
 

svanmatr

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My observation is that diesel and heating oil are made from the same fraction of crude oil. Heating oil shortage or building reserves of heating oil = higher diesel price. Mid summer = low heating oil demand = low diesel price.
 

Magnulus

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Supply for diesel fuel in the US is restricted compared to gas. The US actually exports some diesel fuel to Europe and/or reforms diesel into gasoline. Europe, OTOH, exports gasoline to the US. If more people used diesel fuel, the price would probably rise at first, then fall. Gas prices may go up as European refineries switch over more to diesel fuel cracking and stop exporting gas to the US.

Diesel, I guess, was relatively cheap at one time because demand for gas wasn't so high. They didn't do all that hydrocracking. But now, you have a high demand for gas so they make it however they can, including taking away some of that diesel fuel and turning it into gasoline.
 

BleachedBora

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Here we go again.
 

VWWV

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Maybe there are some pseudo-scientific answers as to why diesel fuel prices are out-of-control but, IMO, the producers know that nearly ALL commerce in the developed world is dependent upon transportation of goods by vehicles using diesel fuel and therefore know that they can jack the price of fuel because they know we will pay it because we are so dependent on the trucking industry and we don't care if the price of what we buy goes up a couple of cents because of increased fuel costs passed on by the trucking industry to the wholesaler to the retailer and ultimately to the consumer. I question that the use of that fraction of petroleum used for heating oil has that much effect on the price of diesel and I base that on the price of diesel vs. gasoline over the past few summers. If the truckers would strike (as they did back in the 70s) when gas prices went so high because of the supply/demand (read: "shortage") and refused to haul goods - it didn't take very long for gasoline prices to come down and supply to build (most trucks used gasoline then, I believe). It might be that's when the trucking industry began the major shift to diesel trucks - thinking perhaps there was a ready supply of that cheaper fuel? How long do you think the price of diesel would stay where it is if the trucks shut down for a couple of weeks? Call me cynical.
 

svanmatr

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Gee, I wonder why diesel prices are lowest in the summer(less than regular gas) when travel and shipping are at their peak?
 

jimlockey

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Because the oil company's are going broke. LOL.
Congress needs a little more CAP money for their up coming campaigns.
 

VWWV

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Quote: "diesel prices are lower in the summer (below regular gas prices)" -- That's used-to-was. Haven't been below regular gas in middle Atlantic or Southeast states for the past two summers. Just you wait, 'enry 'iggins, when the truckers stop hauling goods then the price of diesel will begin to drop. I'm guessing it will be along about the time Wal Mart begins to show a drop in their profits. Call me cynical.
 

dubvulture

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Isn't it all due to a conspiracy between "big" business and secret government agencies and the military and of course George Bush and a bunch of mean old greedy guys and their powerful alien friends?
 

McBrew

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Diesel is taxed more than gas... it's basically a back-door tax on the trucking industry.
 

Magnulus

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On the state level, I can think of only Florida that levies such a high rate of taxation on diesel fuel. It's 26 percent, vs. 13 for gas. If it weren't for the tax, diesel would probably be very close to gas right now here. This was done about ten years ago or so to fund roadwork, in actuality, sucking the money into general revenue. It's like a sin tax on diesel.

I'm going to go biodiesel. Maybe B50. Might as well. A local co-op will sell it for 2 dollars per gallon made from waste oil. And I won't pay any taxes on the stuff (I won't tell if you won't tell).

If it were not for the environmental benefits, I would not be driving a diesel car in Florida. It barely makes economic sense when diesel costs about 30 cents more per gallon and you can get a Toyota Corolla that gets about 34 mpg.
 

DrStink

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Diesel is taxed more than gas... it's basically a back-door tax on the trucking industry.
a) If most diesel in the US is used by long haul trucks, and long haul trucks disproportionately cause road wear, then the trucking industry *should* pay more.

b) Federal fuel tax is 18.4 cents for gasoline and 24.4 cents per gallon for diesel.

c) State fuel taxes vary quite a bit. Some states tax them the same, some tax diesel less and others tax diesel more.

In CT, CA, OR and many others, they're taxed at the same rate (CT 26, CA 18, OR 24).

In KY and MI, diesel is taxed 3-4 cents less per gallon.

In MD, the gas tax is 23.5 cents per gallon compared to 24.25 for diesel. AZ, FL and VT are the worst with regard to diesel, charging an extra 6-12 cents per gallon.

d) Gotta love 'teh intarweb'. http://www.fhwa.dot.gov/ohim/mmfr/dec02/mf121tpg1.htm
http://www.fhwa.dot.gov/ohim/mmfr/dec02/mf121tpg1.htm
 

PDJetta

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I can't understand why diesel fuel costs more than gasoline right now. I thought it was possible to vary the production mix between diesel and gasoline. With such a price imbalance I thought refiners would shift to more diesel production to reap the higher profits and this would cause lower supplies of gasoline and a price increase for gas and the easing of diesel prices. At some point of maximizing profits, I would guess the price of diesel and gasoline would be equal, with diesel being about 25 cents less a gallon and gasoline being about 25 cents more a gallon. What gives, why has this normalization in prices and supplies not occurred? Are the refiners producing the maximum percentage amount of diesel/heating oil and lowest amount of gasoline from the feedstocks they are getting and thus can not increase more diesel?

--Nate
 

WisTDI

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I can't understand why diesel fuel costs more than gasoline right now. I thought it was possible to vary the production mix between diesel and gasoline. With such a price imbalance I thought refiners would shift to more diesel production to reap the higher profits and this would cause lower supplies of gasoline and a price increase for gas and the easing of diesel prices. At some point of maximizing profits, I would guess the price of diesel and gasoline would be equal, with diesel being about 25 cents less a gallon and gasoline being about 25 cents more a gallon. What gives, why has this normalization in prices and supplies not occurred? Are the refiners producing the maximum percentage amount of diesel/heating oil and lowest amount of gasoline from the feedstocks they are getting and thus can not increase more diesel?

--Nate
Maybe supply is having a hard time keeping up with demand.
 

philh

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Here is a related and interesting discussion I found on a motor home forum. As you can imagine, they are as greatly concerned and interested as we are about the price of diesel. Especially with fill-ups approaching $100.

Some quotes:

Typically, the price of diesel is more expensive in winter than in the summer. There are many reasons for this FACT. First, diesel in the winter is a blend of #2 (normally used in the summer) and #1 diesel. #1 diesel costs more to refine than #2 diesel since it has more of the natural waxes removed. Second, a 55-gallon barrel of crude oil can be refined in a multitude of ways. In the winter the demand for home heating oil (basically diesel fuel that hasn’t been fully refined) goes up. The refineries have to compromise between making diesel or home heating oil. In the winter the demand for heating oil increases, therefore the supply of diesel fuel decreases. Third, additional additives may be blended with the diesel to resist gelling or condensation. These are issues that do not need to be dealt with during the summer. Fourth, as you have found out, maintenance on refineries is usually scheduled during the winter months so that the demand for gasoline during the summer vacation months can be met.
Each year it seems that at some point in time, the Petroleum Market in the Pacific Northwest, and nationally for that matter, wanders into uncharted waters, and it's blatantly obvious that 2005 is no different. The volatility continues. For the (past) several years, February has typically seen large market increases due to a spattering of suppliers that routinely schedule refinery "turnarounds" for this "lower demand" time of year. A "turnaround" is basically when the refinery operation is taken down for scheduled maintenance, thus refinery product runs are reduced significantly. Tesoro does their turnaround each February, as is the case right now. U.S. Oil is also down for turnaround, although their impact is not nearly the scale of Tesoro's. Tesoro apparently had an agreement with Shell to help supply diesel fuel to offset their turnaround, and ConocoPhillips had a similar agreement with U.S. Oil. From what I heard yesterday, both Shell and ConocoPhillips are having unannounced issues at their own refineries, thus it is becoming increasingly difficult for them to live up to their respective agreements. Unfortunately, supply and demand is still the rule, and the Pacific Northwest is currently having diesel supply issues. The Seattle OPIS Rack Average for diesel fuel, over the past 2 months (Dec. 15th - Today) has increased over .76 cents per gallon. The PNW Diesel rack prices today are in excess of .40 cents per gallon over Los Angeles Carb diesel prices, nearly .53 cents per gallon over New York Harbor L.S. Diesel, and more than .57 cents per gallon over L.S. Diesel in the Gulf.
The information offered (facts or opinions - take your pick) is consistent with my understanding of the current market. I work for ConocoPhillips in the IS department, but I have contacts throughout the business and support the commercial pricing group directly.

If you are convinced of conspiracy theories and corporate greed, I don't know how to convince you otherwise except to try to dispell rumors and present fact. Since the Enron debacle, the industry seen a lot of legislation and scrutiny.

The market is what it is. It is a fact that refineries have turnarounds (outages) and this can be corroborated by searching
the internet (look for BP Cherry Point and also Tesoro Petroleum).
 

DrStink

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I can't understand why diesel fuel costs more than gasoline right now. I thought it was possible to vary the production mix between diesel and gasoline. With such a price imbalance I thought refiners would shift to more diesel production to reap the higher profits and this would cause lower supplies of gasoline and a price increase for gas and the easing of diesel prices. At some point of maximizing profits, I would guess the price of diesel and gasoline would be equal, with diesel being about 25 cents less a gallon and gasoline being about 25 cents more a gallon. What gives, why has this normalization in prices and supplies not occurred? Are the refiners producing the maximum percentage amount of diesel/heating oil and lowest amount of gasoline from the feedstocks they are getting and thus can not increase more diesel?

--Nate
Maybe supply is having a hard time keeping up with demand.
And US refinery capacity is pretty much maxed out. Even if refiners could get more crude, they don't have any excess capacity.

Refining is a low margin business, so companies haven't wanted to make long term investments in new facilities. Add NIMBYism and environmental regulation to the mix, and you'll discover that a new refinery hasn't been built in the US since 1976.

In 1982, 263 refineries could process 17,618,872 barrels per calendar day. In 2002, 159 refineries could process 17,177,371 barrels per calendar day. Without improvements in efficiency, we'd be really hosed.

Nor can a single refinery use all types of crude to make any type of hydrocarbon. The plant design dictates which feedstocks can be used to make which products.

On top of all that, add in the need for dozens of different boutique fuels to meet various air quality standards, and you have a royal mess.

I can't help but wonder how much of this could be avoided with good leadership at the national level. Footdragging at the EPA ceertainly can't be helping.


Sources:
http://www.eia.doe.gov/emeu/finance/mergers/refcap_tab2.html

http://www.eia.doe.gov/oil_gas/petroleum/info_glance/refineryops.html

http://www.msnbc.msn.com/id/6019739/
 

ofhs93

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Diesel is taxed more than gas... it's basically a back-door tax on the trucking industry.
a) If most diesel in the US is used by long haul trucks, and long haul trucks disproportionately cause road wear, then the trucking industry *should* pay more.
I would like to just let you in on a little known fact that most people outside of the trucking industry don't know....when you drive past an 18 wheeler and you see those little stickers on the side of the truck...those are called apportioned plates...you see...trucks get the double whammy when it comes to taxation...those apportioned plates are required by states if you want to run your truck on thier roads...and those plates cost big bucks (we're talking $1500 and up if your going to run the east coast). Not to mention the fact that they only get about 4..maybe 5 miles a gallon if they are doing REAL good...so they are already buying a huge portion of the fuel and thus paying a much higher percentage of the tax overall. So your statement above...while true in the fact that they cause more wear...does not present all of the facts...fact is they already pay a MUCH higher rate of tax for road use than the rest of us...the higher tax on diesel is just more fuel to the fire...on another note...I'm saddened and apalled to find that my great state of PA has officially the highest rate of taxation on diesel in the country...I have always believed that my state was one of the last bastions of liberty, freedom, and less government intervention left in the Mid Atlantic/New England...but alas...the Legislature has failed me in the form of higher taxation on diesel....at least the property and income taxes are still much better than the rest in the northeast. The REAL joke in all of this is the fact that the high diesel tax in PA in reality COSTS the state money...if you drive through PA and stop at a truck stop you will see TONS of trucks parked in the lot...but take a look at how many are actually filling up...it's next to none..they just wait until they get to a lower priced state like NJ or points south to fuel up. If they were to lower the tax by 10 or 12 cents they would double the money they take in. The fact is that PA is officially the most traveled upon state in the country...meaning more out of state vehicles and trucks travel into or through PA than any other state. If they lowered the tax to make fuel cheaper or even equal to the surrounding states they would see a huge jump in revenue. But alas...the geniouses (spelling) in Harrisburg are asleep at the wheel as usual....ok rambling rant off...for now
 

DareDiesel

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Yup. There is always a point of diminishing returns on taxes. For that matter there is a point if maximum returns and often those two point are not close together.

Take my state, Washington. We have no income tax. Instead we have a fairly high sales tax. Our bureaucraps (
slip of the finger, sp?) can't seem to figure out that they could effective increase revenues by lowering or eliminating business and corporate taxes. By doing so they would stimulate business growth and cashflow. This always translates into more employees with spendable income. And that income will get taxed when the population spends.

Similarly, the quickest way to force higher CAFE and lower polution would be to raise taxes on gasoline while maintaining or lowering taxes on diesel fuel types.

"Common sense isn't common." by too many to give accurate credit
 

LightningTDI

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Hang on a minute...what in the last 10 days has occurred to cause the diesel price here in Tampa to go up by US$0.19/gallon?
 

philh

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Hang on a minute...what in the last 10 days has occurred to cause the diesel price here in Tampa to go up by US$0.19/gallon?
Not anything that hasn't made it rise nearly that much in Houston. $0.19 is chump change compared to the PNW.
 

McBrew

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Especially with fill-ups approaching $100.
I wish! My RV has a SMALL tank... 65 gallons. At a good Maryland price, I'll pay $2.05/gal -- or about $130 to fill up. Most diesel coaches have larger fuel tanks. At least it gets 12-14 MPG... a lot better than my previous gasser RV, which got 6 MPG.
 

TornadoRed

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So why now is diesel fuel more expensive than regular gas?. Based on the fact that diesel is less refined than gas, why has the price gone up. In the 15 years that I have been driving VW diesels I have watched the price grdually go up until now it cost more thas gas. I have traveled both here in Alberta, weat into B.C. & down in to western US & found much the same. It seems to be going much the same way as propane. Any one have the answer?
Here's part of the answer:
"A few weeks ago a refinery in Alberta, Canada, the Suncor facility, went down,” Ray explained. “At that point Canada started buying up diesel from the West Coast. When you have all this demand with Canada buying up diesel from the States, the market forces take effect. There might have been some turnaround at the refineries in Washington State from shifting from winter to summer diesel production.”
http://fleetowner.com/news/topstory/diesel_price_west_coast_washington_030105/

There's also the Chinese factor, and all the refineries switching to summer gasoline and diesel formulations.
 

Loyd

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Apr 29, 2004
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Washington
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:
Whatever you do, stay away from this station. They're charging $2.859 per gallon!


Anyone know of any higher priced stations?
We can match it in Eastern Washington. The price has been going up by 10-cents a gallon every week. The common price of diesel at the big truck stops is $2.70 per gallon today. A few stations are up to 2.849.

The news people keep saying that the price of gasoline is going up soon. At present regular is $2.10, middle grade is $2.15 and premiem is $2.20 per US gallon.
 

philh

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Wholesale prices in the PNW for March have eased about 5-7 cents per gallon, which is better than upward I suppose. They have gone up about the same for the Gulf Coast.
 
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