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Cost of diesel fuel

 
  #1  
Old 01-18-2019, 09:59 AM
RandyinTN
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Cost of diesel fuel

Where I live diesel is priced at $2.95 and a couple of days ago I gassed up with 87 at Costco for $1.79. This means diesel is roughly 40% more. When I bought my first diesel truck in 2002 diesel was $.20 a gallon cheaper than 87. What has changed in the last 17 years to push diesel up so high? Low sulfur?
I realize location plays an important roll on costs but why is diesel so much higher than 87?

This isnt a gas vs diesel thread. Just trying to understand why diesel fuel is more costly.
 
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Old 01-18-2019, 10:02 AM
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$2.68 last night in Fredericksburg, VA.
 
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Old 01-18-2019, 10:05 AM
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Gasoline requires more refining, I expect, as well. Diesel has more BTU, my theory is somebody just decided they should charge more. It used to be cheaper, that's a fact.
 
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Old 01-18-2019, 10:09 AM
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More road use tax on diesel. The ultra low sulphur means a better grade of crude is used and another reason for the oil companies to justify price increases. Between the government and oil companies setting the prices diesel owners ain't got a chance!!
 
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Old 01-18-2019, 10:16 AM
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[color=left=#000000]Good short read:

https://www.globalpetrolprices.com/articles/4/

According to our data set of 161 countries, gasoline is more expensive than diesel fuel in 84% of all countries. On average, diesel is 9,84% cheaper but the difference varies considerably across countries as well as within countries over time. Here we discuss several factors contributing to the price spread. [/color]=left
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[color=left=#000000]Both gasoline and diesel fuel are produced from crude oil and therefore the cost of crude oil is the main factor influencing gasoline and diesel prices. However, fuel prices also reflect refining costs, taxes, and distribution and marketing costs. Additionally, retail prices are affected by market demand. These factors lead to a price spread between gasoline and diesel. [/color]=left
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Refining costs:[color=left=#000000] During the process of refining, crude oil is separated into different components and these components are converted through further treatments into gasoline, diesel fuel, and other petroleum products. Diesel fuel is heavier and less volatile than gasoline, which makes it simpler to refine from crude oil. As a result, diesel tends to be cheaper than gasoline in most countries around the world. However, the introduction of Ultra-Low Sulfur Diesel (ULSD) between 2006 and 2010 increased diesel production costs since ULSD requires more refining.[/color]=left
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Taxes:[color=left=#000000] Many countries tax diesel and gasoline differently. For example in the USA the federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. In contrast, most European countries tax diesel more lightly than gasoline. Since taxes are one of the major components of the final consumer prices of fuels, tax policy determines to a great extent the cross-country differences in gasoline and diesel prices.[/color]=left
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[color=left=#000000]The spread between diesel and gasoline prices also varies over time with the following factors:[/color]=left
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Demand:[color=left=#000000] In contrast to gasoline, diesel fuel is used to power not only cars but also public transportation vehicles, large delivery trucks, off road vehicles, boats, machinery, generators, etc. During periods of economic expansion industrial sector energy demand increases significantly and diesel prices rise more than gasoline prices. If the demand for diesel fuel is higher, the price spread will widen. [/color]=left
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Seasonality:[color=left=#000000] Fuel oil used for home heating is made from the same basic components as diesel fuel. As a consequence diesel prices are affected by heating oil demand. In winter, the demand for heating oil rises and this tends to increase diesel retail prices. As a result, the price spread between gasoline and diesel exhibits seasonal variations.[/color]
 
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Old 01-18-2019, 10:19 AM
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Originally Posted by Paw's 150 Lariat View Post
More road use tax on diesel.
The road use tax differential is fairly minimal in most states and 6 cents at federal level. And the weighted average has diesel slightly less on taxes.

https://en.wikipedia.org/wiki/Fuel_t..._United_States

I'm not sure of the accuracy of this statement but diesel seems higher in areas where heating oil is consumed.
 
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Old 01-18-2019, 10:22 AM
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I read an interesting article on this. It said the refiners spent big bucks removing sulfur from the fuel so it was cheaper for them to buy crude from sources that already had a lower sulfur content instead of trying to remove it all at the refinery. The crude that’s naturally lower in sulfur is more expensive so costs go up but not as much as they would if the refiners were using crude with a higher sulfur content to begin with. The article went on to talk about new regs for marine diesel used in the shipping industry. Evidently the ships are going to be required to start using low sulfur diesel as well which is expected to raise demand for the naturally lower sulfur crude and drive up prices for diesel fuel in general. I also read an article that said it was all hogwash and that diesel prices weren’t going anywhere. I guess time will tell. I remember diesel going over $4/gal back in 2005 or so. That was pretty painful, hoping not to repeat!
 
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Old 01-18-2019, 10:35 AM
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Heavy demand for Diesel raises prices IMO. There's a lot of shipping going on out there. So with the good we take the bad.
 
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Old 01-18-2019, 11:11 AM
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  #10  
Old 01-18-2019, 11:19 AM
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Originally Posted by tony m 6.7 View Post
Heavy demand for Diesel raises prices IMO. There's a lot of shipping going on out there. So with the good we take the bad.
This is true. ELD mandates changed and hit the market in April of 2018. The end result is less hours behind the wheel and more trucks on the road because guess what, our desire for goods is only increasing... When’s the last time you saw a semi powered by gasoline? Diesel is still one of the first and easiest petro-chemicals to refine but supply and demand have flipped the price at the pump where diesel used to be more economical.
 
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Old 01-18-2019, 11:25 AM
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$3.70/gal for diesel here in NorCal. Why? Depends!
 
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Old 01-18-2019, 11:29 AM
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I saw it for $2.39 a gallon near my house.
 
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Old 01-18-2019, 11:42 AM
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Originally Posted by Tedster9 View Post
Gasoline requires more refining, I expect, as well. Diesel has more BTU, my theory is somebody just decided they should charge more. It used to be cheaper, that's a fact.
Spot on. I read an article from a petroleum industry exec a few years ago. His response to the question about diesel being priced higher, "be cause we can".

Originally Posted by tony m 6.7 View Post
Heavy demand for Diesel raises prices IMO.
The same article said exactly that.
 
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Old 01-18-2019, 11:42 AM
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Just fueled up for $3.29 a gallon in SE PA. I can drive 15-20 minutes south to Delaware and pay $.57 less a gallon. #notmygovernor
 
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Old 01-18-2019, 11:46 AM
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Originally Posted by Paw's 150 Lariat View Post
Between the government and oil companies setting the prices diesel owners ain't got a chance!!
The government has nothing do with setting the price of gas or diesel. That's strictly the petroleum companies doing. The tax for diesel is only 6 cents per gallon higher than it is for gasoline.

https://en.wikipedia.org/wiki/Fuel_t..._United_States


Oh, and diesel in Northern Colorado is around $2.60. I paid $1.91 for gasoline the other day.
 

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