Why is Diesel So Expensive?
posted by Ira Flatow on Sunday, October 1. 2006
As someone who drives a diesel powered car - and getting 40 mpg - I'm continually comparing diesel oil prices with gasoline prices. And I'm constantly baffled: why is diesel oil priced higher than gasoline?
Only during short periods of very high gasoline prices has diesel been cheaper.
Gasoline is highly refined, which means to me it costs more money than diesel oil to produce. So why is diesel so expensive? I've asked industry representatives this question over and over again...and have never gotten an answer that makes sense.
Maybe you have one....
Only during short periods of very high gasoline prices has diesel been cheaper.
Gasoline is highly refined, which means to me it costs more money than diesel oil to produce. So why is diesel so expensive? I've asked industry representatives this question over and over again...and have never gotten an answer that makes sense.
Maybe you have one....
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Having done as much credible research as it is possible to do online, I believe the answer to this question is a typical economic one.
Although you are correct in saying that diesel is slightly cheaper to produce than gasoline/petrol, the diesel market is just far less competitive. Hence suppliers have less competitive pressure (something I'm sure they would never care to admit). This leads to higher prices and smaller cyclical changes.
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While at the show i ran across an incredible Diesel Performance company that specializes in diesel performance, and better mileage in any diesel truck. Truly amazing what they can do.
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diesel is more expensive due to the new law requiring it to be 15 ppm or less. ppm is parts per million geniuses. in turn, it has to be more refined, hence the price increase.
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cause of the gover ment and president to sending troops to iraq
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IF THE WAR IN IRAQ IS OVER BUSH TAKING THE OIL, THEN WHY HAVE THERE BEEN NO IMPORTS FROM IRAQ? MAYBE YOU BEEN SNIFFING AL GORES GLOBAL-BALONEY WARMING ETHERS FROM HIS G-5 JET!
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Gee, "Joe," what a cogent, pithy, eloquent reply. How could it not persuade me...?
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I't clear from your global warming statement that you are in the camp that keeps it's head in the sand.
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Joe didn't start it. If someone doesn't agree with the arrogant egotistical global warming sheep it means they have their head in the sand? I have never been convinced by the opposite reason. My head is not in the sand, its looking around, noticing things like vast pools of oil under the deserts of Saudi Arabia and gas and oil under the frozen artic circle. Then I ask myself, "why would that be so if the earth had not been much different a long time ago?" This begs the next question, "Who really thinks there is anything mankind can do to stop natural earth cycles of heating and cooling?"
Keeping my head out of the sand to read that the BBC recently suppressed a story that said the earth's temperture stopped rising 10 years ago because of pressure from the global warming fanatics.
We're just out here with our heads out of the sand clinging to our guns and bibles. Believe what you want to believe but don't belittle anyone that doesn't agree with you.
To answer the original question: Diesel is higher priced because of the fact it gets more mileage and therefore became more popular. It has nothing to do with the sulfer content or any of that other nonsense. Yes, refining that out does add to the cost but the added cost is still well below that it takes to refine gasoline. The price is what the market will stand and if the market for diesel can be a considerable percentage higher and people will still buy it then that is wat it will be. What people fail to understand is the oil industry, just like the medical field or real estate is not a non-profit organisation. You have the right to not purchase the products that come from the oil industry. It is just that simple.
Americans whinge about the price of gasoline and diesel more than anywhere else you can go in the world even though at today's prices its still very very much cheaper than what the rest of the world pays. I grew up a farmer's son in rural Illinois. I work in the UK and Holland and have a home, wife and children in Ukraine now. It costs over $8/gallon in thr UK and over $5/gallon in Ukraine. The average income in Ukraine is less than 10% of the average American but do they bash their president or their government for world economic conditions? No, they are smart enough to know its supply and demand.
Why do you think a 3 bedroom and 2 bath home in California can be considered at rock bottom price at $5-600,000? That's rock bottom? That's a ridiculously high price still. But the market for homes was sky high there in the dotcom years. No one had to ask why a home like that cost a million$ back in 2000?
With prices what they are today for oil products it should allow for a healthy level of investment in alternative fuel and public transport. That is something that has been neglected for too long. Its not Exxon's fault there isn't a rail network in America. Its not their fault the American automobile firms can't foresee a day when the fuel price might not be so cheap and to have the right cars for todays market already designed and waiting in the wings to be rolled out when the time comes. Toyota did....twice. (the 70's Corolla and today's Prius)
One last thing, with prices what they are for diesel no one should have to sit around waiting for government to provide funding for bio-diesel. Anyone is free to invest their own treasure to produce the competitive fuel.
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"Who really thinks there is anything mankind can do to stop natural earth cycles of heating and cooling?" I suppose some people think they can STOP natural cycles, but why would a rational person not think a cycle could be either aggravated or ameliorated.
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Because the price is set, like all prices in a capitalist economy, by what the market will bear rather than by absolute cost of production. They call this process "market forces," as if they exist outside of themselves, when talking to consumers, but refer to "record profits" when talking to stockholders.
Diesel used to be much cheaper than gasoline, until it became popular to put it into consumer vehicles, but several things have happened to change the production cost of the fuel at the pump.
First is the transition to ultra-low sulfur diesel, which adds perhaps five to eight cents per gallon, counting both direct costs -- the purchase price of low sulfur oil is higher than oil o lesser quality -- and investment costs required to further refine ordinary oil.
The second is taxes. Diesel fuel is essentially the same stuff as heating oil, but is taxed at a higher rate. 18% of the average price at the pump, according to the DOE, is taxes, 54% is the cost of the oil itself, 22% is the cost of refining, and 18% is distribution, marketing, and profit.
Of course many companies sell themselves their own oil, so there may be substantial profit on that transaction as well.
For gasoline, again according to the ODE, 15% of the price is taxes, 55% the cost of the oil, 15% the cost of the refining process, and 14% distribution, marketing, and profit.
In 1990, the average price of gasoline was $1.16 per gallon, the average cost of diesel fuel was $0.73 per gallon, and the average cost of heating fuel was $1.06.
In 2002, the average cost of gasoline was $1.36 per gallon, the average cost of diesel fuel was $0.76 per gallon, and the average cost of heating fuel was $1.13.
1in 2005, the average cost of gasoline was $1.87 per gallon, the average cost of diesel fuel was $1.95 per gallon, and the average cost of heating fuel was $2.05.
As you can easily see, the relative prices have varied all over the map.
The obvious inference is that, despite the higher taxes on diesel fuel in comparison to heating oil, and very similar costs of production, people are more driven to heat their homes than they are to drive their diesel cars, so the companies can charge more.
Likewise, in 1990, diesel cars were uncommon, and the primary users of diesel fuel were commercial, driving large trucks or tractors.
Presumably, a fellow filling up a truck with 300 gallons of diesel fuel every day or two is in a better position to drive a hard bargain than is a fellow filling his VW diesel with 16 gallons one a week or so.
Cheers,
Lee Anne
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I have been using heating oil for years. It's always less expensive than the diesel fuel at the pump. If it were otherwise, I would have no qualms about tanking up at the pump and bring the diesel fuel back for heating home. Knowing that, the local heating oil distributors are quite diligent about keeping their prices lower than diesel fuel prices at the pump. That's market in action.
Under normal market circumstances, the large visible profit for oil companies would have led to massive new entrants both in oil drilling and refining, driving down prices shortly. Of course, we have the regulators to thank for keeping out would-be competitions. No wonder companies like BP are embracing environmentalists . . . they are the perfect leg-breakers against would be competition.
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As someone who use to drive diesels and would go back if I could get them at the right price. I have to say doing the math 30 MPG vs 45 or 50. Diesel is still the way to go.
I like the fact I missed all the 80/early 90's gas flue injected cars. Gas flue injection is much better now.
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Just keep on reducing production capability, increasing prices, turning the tap on and off with the political winds and biodiesel will become a true market force. People are getting fed up and the oil companies will end up shooting themselve in the foot. We made it to the moon and Brazil is energy independant. Don't tell me it can't be done here in the U.S.A!
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Don't forget that the oil producers are taking all necesary steps to be the sole distributors of vehicle fuels, no matter the source. Under this monopoly we will not see true competative pricing.
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As the new car fun has recently worn off my VW turbo diesel I have started to wonder about the same issue that Ira has brought up. I sold my supercharged sports car (gas hog) and purchased my current diesel 5 days after Katrina. Since then I have wondered out loud to just about anyone that would listen about this subject.
The answer that I have come to over and over again is that the energy industry is in the business of making money, to that end they (meaning any myriad of a number of companies) have installed persons into the proper political office to influence energy policy in the best interests of making money. I.o.w.. Limiting regulation that would effect everything from production minimums to throttling back conservation efforts.
My personal feeling is that until the monopoly laws of the united states are strengthened and all the large energy companies are split up we will continue to see increased price and availability fluctuations.
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Well in South Africa it is cheaper, even though new diesel cars is literally flying out off the showrooms, also very efficient the Citroen C3, diesel model is more efficient than the Prius, and costs a third. Also the government sets the price and regulates the industry.
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I recall after the oil crisis of 1974 the car manufacturers started making diesel cars. The price of diesel went from half of gas to 10 cents/gal more. I am surprised at Lee Ann's comments as I have never seen a gas station in california charge less for diesel than gas. Of course gas prices near the refineries are always 10 cents more that in eastern CA and Nevada. I'd like to know why that is!
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It must be CA, because diesel in most states I lived in / traveled through from the late 80's until a few years ago (northeast/midwest) was always less per gallon, steadily creeping up and finally, within the past three/four years, surpassing the price per gallon for unleaded gas.
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Hello, I bought my Isuzu NPR new in 1987 and can still recall that diesel was around $00.88 a gal. then, about the same price as reg. unleaded gas.
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When I first bought my Diesel car, Diesel fuel was cheaper than gasoline. Then winter came and the price of Diesel exceeded the price of gasoline. I had read that was due to winterization additives.
Lately, the price of gasoline has fallen, and the price of Diesel has not (as much). I have heard that the price of gasoline has fallen in large part because additionally refineries (paid for partially by tax subsidies put into place to prevent catastrophe-induced price spikes after Katrina) have come online and increased supply. Perhaps the increase in supply does not apply to Diesel fuel. It seems convenient that the price drop comes this close to election time, and applies to fuel types that affect more voters (the price of aviation fuel has also not dropped as much).
As a wacko side note - my prediction is that the price of Diesel will go down dramatically after the construction of the Nafta Super Highway.
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no it won't nobody cares about a highway, what are you snorting obviously you know nothing about making money the price of gas will continue to go up, and even if they do come out with a alternative fuel the oil companies will just buy out the alternative fuel companies and they will control that to. you are so dumb why dont you so some research before yo open your mouth.
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My husband & I discussed the same thing.
I breaks down like this.
corporations
shareholders
departmental kingdoms being asked to pony up LOWER costs & HIGHER PROFITS.
period.
no mystery.
BlueBerry Pick'n
can be found @
ThisCanadian.com
"Silent Freedom is Freedom Silenced"
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best site
http://printingworld.org.in/
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I want to add a related question:
Why are diesel engines so much noisier than gasoline engines. Diesel engines make huge amounts of running noise not at all prevalent in gassoline engines.
How come?
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Hey there the main reason for a diesel engine beging allot more noisey than a gas engine is that a diesel is a compression combustion engine...where a gas engine is a spark combustion engine. in a compression combustion engine there are higher compression ratios to create the heat to ignight the fuel... resulting in more noise.. however desighn change is improving on how a diesel runs.... the 2006-07 VW TDI's are increadably quieter than the 1981 Jetta 1.6 natuarly asperated diesel i drive.... direct injection vrs precombustion chambers..... hope this helps a bit...
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why are they so loud? diesel engines combust by using compression, not spark. when the diesel fuel compresses,it explodes, its more of an explosion, than a burn, like a standard engine, the diesel has twice the compression ratio of a standard engine and twice the stroke{the diesel piston travels twice as far as a reg engine} the pistons and bearings ard biult twice as strong as a standard engine. basically its the sound of an explosion, as a regular car engine burns gas....
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The part about the diesel having twice as long of a stroke is absolute nonsense!!
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Part of the reason diesel may be more expensive than gasoline is that the EPA and many environmental groups consider diesel as an unacceptable alternative to gasoline engines. They have not considered the advances made in newer diesel engines in regard to emmisions as well as their greater efficiency.
I know of those who consider the whole business of diesel prices as big business and big government price gouging. They have no hesitation to use heating fuel in their diesel engines. As Lee Ann wrote, it is essentially the same except for the dye added to differentiate that one is considered legal for passenger vehicles. Not much of an incentive when paying almost twice as much to stay on the good side of the law.
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gas companys are crimminals, it is as simple as that they charge what they can, they dont give a fuck about you or me.
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My wife and I just returned from a trip down to the LA / Palm Springs area with our 5th wheel and 2500 Dodge Diesel truck and saw Diesel fuel at $.30 – $.60 higher than Premium gas. Understanding that Diesel does not require the processing that gasoline requires and thus costs less to produce, I propose that the gas companies are blatantly GOUGING the American public. I’m not apposed to making a fair profit, but this is obscene. It is not only putting small business’ that rely on diesel trucks out of business, as well as the truckers themselves, but also because this country’s economy rides on Diesel trucks and trains, in the form of products and services, it forces the suppliers to raise prices simply to cover the cost of running their trucks. The excuse that they will most likely use for the obscenely high price of diesel is that they now have to take the sulfur out of the fuel. That’s fine but the same processing plus a lot more goes into refining gasoline. In my opinion, that excuse just isn’t believable. Something has to be done about it.
If I were a terrorist coming into this country (which I am not), looking for a way to cripple the American economy and hurting a lot of people, but getting very rich instead of killing myself with a car bomb, what better way to do it than to be in the position to control the price of diesel and gouge the American people. I propose that these kinds of tactics that are being imposed on America in the form of artificially inflated Diesel prices qualifies those that are setting the price of diesel as nothing more than terrorists or want to be terrorists.
That being said, what can we do about it? How about finding out who these people are that set the prices for diesel and print their names in this blog. Perhaps that will make them think twice about sabotaging the American economy and at least this way they have been exposed. If they choose to ignore our seriousness about this and don’t bring the price of diesel back down to where it should be, we will know who they are and can escalate our efforts to convince them that they should think twice before gouging diesel users.
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Hi Science Friday -
I'm a physician and medical educator. I'm also a long time NPR listener and public radio subscriber.
I love Science Friday, and I look forward to learning from Ira' Flatow's discussions.
So I'm writing to find out why listeners today were treated to a critique of California's global warming regulations by a "panelist" working for an Exxon-funded think tank.
The panelist - Margot Thorning- works for the"American council for capital formation". A quick google of the accf turns up - on the third hit on the first search page - a listing on Exxonsecrets (see below).
Wow - a K street spokesman for industry. Funded by Exxon.
Who for years was a registered lobbbyist against the Kyoto Protocols.
I can sure understand why Exxon wants to be paying the salaries of the people NPR has on the air to discuss global warming.
I can't understand why Science Friday pays bookers and editors to have the Exxon funded guests on - and not tell the listeners they're listening to Exxon funded guests talking about global warming.
The largest single NPR radio listenership is here in the Bay Area. I can't understand why NPR and/or TOTN/Science Friday think Exxon-funded guests" commenting on global warming would pass unnoticed.
And I can't understand how KQED'll spin this at pledge drive.
In the future I'll expect the bookers and editors at TOTN/Science Friday fully research and disclose panelists' funders and past advocacy reagarding issues they're invited to discuss on air.
And I'll expect they'll inform you, so you may inform your listeners.
I like you and your program, and I want to be able to put my trust in you and Science Friday.
To retain my trust, I need to know the editors and bookers are doing due diligence. As a listener, I sholuldn't have to do the google search to find out the guest Science Friday invited to discuss global warming works in a shop where Exxon pays the bills.
I did the google search in seconds.
I believe professional journalists should not have to rely on listeners to identify invited discsussants' conflicts of interest.
I believe identifying these ethical lapses is the responsibility of the program's editors and bookers.
If bookers knowingly chose to invite an Exxon funded K street spinner on to comment on environmental policies - yet concealed the Exxon connection from listeners - can they please consider the ethical retrofit required to prevent such misleading journalism in the future?
If bookers just happened by accident to choose a panelist with a long history of opposing the Kyoto Protocols and supporting corporate positions who just happened to have a K street address and just happened to be coincidentally available when Science Friday was discussing California global warming regulations....
uhh, right.
Exxon and the corporations have a wholly owned media - several, in fact. They're called corporate media.
If NPR/TOTN/SF bookers choose to give air time to corporate-funded flacks, I hope they'll have the decency and ethics to tell your listener-supporters who the flacks are during the program.
And if the flacks don't want their funding exposed, that tells us all just how much they want to inform your listeners.
Not at all.
The flacks want to spin, not to inform. That's why Exxon pays them in their K street offices.
What, in your Science Friday offices, can be done so the show can't be manipulated by PR flacks in the future?
Thanks for your consideration of this question and your work. I hope to be able to continue to learn from honest discussions on your program for many years to come.
Your devoted listener-supporter
Kirk Murphy
http://www.exxonsecrets.org/html/orgfactsheet.php?id=77
1750 K Street NW.Suite400 Washington, DC 20006-2302
Phone: 202-293-5811
Fax: 202-785-8165
Founded in the early 1970s, ACCF's motto is "economic growth through sound tax, regulatory and environmental policies."
ACCF brags it is "a well connected spokesman for American business in Washington," a "key player" in policy circles and "one of the most influenctial organizations operating behind the scenes" in the Washington policy making arena (from web site "about ACCF" March 2004). According to Senate records, ACCF officers Mark Bloomfield, Margo Thorning, and Mari Lee Dunn were registered as lobbyists for ACCF on Climate Change Policy and the Kyoto Protocol for the years 1998, 1999, and 2001-2003. They argued that Kyoto would have a severe negative economic impact on the US economy. In August 2002, ACCF established its International affiliate, the International Council for Capitol Formation. Based in Brussels, it focuses on "reducing tax, regulatory, anti-trust, and trade barriers" primarily in Europe (www.iccfglobal.org, March 2004).
KEY QUOTES
"Given the severe macroeconomic impacts the Kyoto Protocol would impose on the United States, including reducing U.S. GDP by 1-4 percent, slowing wage growth significantly, worsening the distribution of income, and reducing growth in living standards, Dr. Thorning called for a new approach. Voluntary measures to reduce CO2 emissions should include modifications to U.S. tax policy that reduce the cost of capital for energy-efficient investments."
Source: ACCF website 3/04
FUNDING
American Council for Capital Formation Center for Policy Research has received $1,309,523 from ExxonMobil since 1998.
2001
$250,000 ExxonMobil Foundation
$150,000 for 'climate change activities' and 100K for 'general support'
Source: ExxonMobil 2001 Annual Report
2002
$299,523 ExxonMobil Corporate Giving
$199,523 for 'climate change activities' and $100K for 'diplomatic outreach activities'
Source: ExxonMobil 2002 Annual Report
2003
$95,000 ExxonMobil Foundation
General Operating Support
Source: ExxonMobil 2003 Corporate Giving Report
2003
$50,000 ExxonMobil Foundation
Project Support
Source: ExxonMobil 2003 Corporate Giving Report
2004
$180,000 ExxonMobil Foundation
Climate Change
Source: Exxon Giving Report 2004
2004
$75,000 ExxonMobil Foundation
General Operating Support
Source: Exxon Giving Report 2004
2005
$360,000 ExxonMobil Foundation
Source: ExxonMobil 2005 Giving Public Information and Policy Research
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Hear, hear.
Although off topic for the current question.
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Your a doctor huh? Good, maybe you can tell me why it costs so darn much for medical care in America. It only costs pocket money to have a baby in Ukraine, for example, and my wife was given far more care than a first wife I had in America. It wasn't like she was lacking for anything. She had untold regular sonograms and the two 4D sonograms we elected to have cost $60 a pop. At 7-8 months she sat for an hour in an oxygen rich environment everyday for two weeks. impressive and paid for as you go, like I said, for pocket money. ($20-30 here and there.
To adress the topic you brought up I think lobbiests for industry are there to save companies like Exxon from having to suffer the consequences of policy generated by pressure coming from misled, environmental special interest groups. They are fairly nazi like you know? They will censor people that disagree with their thinking and try to manipulate the media. For example, read how BBC's science dept was pressured into changing their report on global warming.
http://newsbusters.org/blogs/noel-sheppard/2008/04/06/bbc-changes-temperatures-decrease-article-incite-climate-hysteria
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Anonymous posted the following URL: http://newsbusters.org/blogs/noel-sheppard/2008/04/06/bbc-changes-temperatures-decrease-article-incite-climate-hysteria.
My own position on climate change is we likely are affecting the globe. If volcanoes can do it, so can we. Is that total proof? No. Would our fervent environmentalists pressure others into not publishing contrary data? Like corporate lobbyists, the stance of all extreme positions (Christianity, Islam, enviroment, industry, ect) is don't confuse the issue with facts because my mind is made up. The author of the piece that announced the pressure is a Dr Marohasy. I googled Dr Jennifer Marohasy and found this information at Wikipedia: Dr Jennifer Marohasy (born 1963) is a senior fellow at the Australian think tank the Institute of Public Affairs, a conservative think tank, and is a director of the Australian Environment Foundation which she says was born out of frustration with the current direction of environment groups.[1] She holds a PhD in biology from the University of Queensland.
Noel Sheppard of Newsbusters.org is a writer for the extreme right-wing National Review Online and an evangistic christian.
Whether a biologists would understand climate change is questionable. Noel Sheppard is in his own reality. In this day and age, I question anyone with an axe to grind when they are labeled either conservative or liberal. Far too often facts escape extremeists in their resolve to make themselves right. So, please, confuse me with facts because I have yet to completely make up my mind. Don't suffer me with your platitudes and righteousness. As Joe Friday used to say, Just the facts, maam.
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Is diesel less expensive to produce? Yes it takes less refining, but it takes more crude - I've seen numbers as high as 25% more than a gallon of gasoline. High crude prices should have a larger effect on diesel.
And it contains about 20% more energy. So the oft quoted 40% greater efficiency of diesel engines is a bit miss-leading.
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As an owner of a VW Jetta TDI diesel car, I've also kept a wary eye on the price difference between diesel and gasoline. I originally bought the car for financial and environmental reasons. Since 2002, I've averaged 40 miles per gallon of diesel. However, I doubt if I've ever recovered the ~$1000 that the diesel engine cost me over the gasoline version. With diesel being 20-30% more expensive than gasoline over the past few years, the cost savings from the increased mileage is greatly reduced. And environmentally, it's been a challenge to find reliable sources of biodiesel. If anyone has a vw tdi or wants to research the car, there's an inexaustible source of information on the forums at tdiclub.com. I wonder what the added cost will be for the Ultra Low Sulfur Diesel (ULSD) that has been mandated for the pumps? Wit the advent of ULSD, there are estimates that efficient/clean diesel cars will overtake hybrid battery cars in 3-4 years. More money for the oil companies... Hopefully I'll be driving my diesel until they come out with Hydrogen Fuel Cell Cars.
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Isn't part of the reason to own a diesel because of greater engine longevity? I thought that, even if the gasoline savings doesn't pay for itself, the engines in the VWs are supposed to last upwards of 400,000 miles. That would be another consideration to take into the cost savings. I know, looking at Ebay, a tdi with 200,000 miles is still worth quite a bit.
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I wish I knew too.. I had a 2003 Beetle TDI and I loved it but in the last few years diesel went from about 20cents below regular to 5 cents above premium. I sold it and switched back to good ole gasoline. That was 1 year ago when I sold it. I didn't want to own a rich man's car.
Currently it's running 20-30 cents over regular.
I'm here in Idaho. The first thing I heard was a shortage in the NW. After that I stopped listening cuzz it NEVER went down. The politico's here in Boise just released a statement in the last month or so finding "No price gouging due to Katrina" for our region but that doesn't speak to the abnormally high prices here for any other reason. I'd love to hear an answer on gas prices in general and diesel specifically, but it sure as hell isn't gonna come from my state.
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The whole west cost is captive to the lack of refineries. That's why prices are higher than the rest of the country. In traveling I have found Oklahoma to have the best prices. As to the price difference between gasoline and diesel (gas being higher now because of artificial shortages) if you want to be really sick just follow the futures market and see diesel always being lower than gasoline. When I asked why of a relative dealing in distribution of oil products why diesel was sold for more I was told "because they can." Legal gouging
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I am an owner of a 2001 VW Jetta TDI and have been following the diesel price issue for some time.
The most logical explanation I have heard is one of supply and demand. Yes, the Iraq War, Katrina, etc has raised gasoline and diesel prices due to supply interruptions, etc.. But, the Iraq war has had a more direct affect on diesel prices than on gasoline. Military vehicles overwhelmingly run on diesel rather than gas. Naturally, the military gets first crack on the available diesel fuel in the U.S.. The war has caused the military's need for diesel to sky-rocket in recent years. This leaves far less diesel fuel available for use by the civilian population. It's a question of supply and demand: less supply for the rest of us + same demand = higher prices.
Furthermore, when the president releases "oil reserves" to try and cut Americans' costs at the pump, those reserves are going to go into gasoline production rather than diesel because gasoline is used by more Americans.
In my un-expert opinion, I don't think the costs of diesel are going to go down any time soon, but I suspect that the costs of gasoline will continue to rise as a product of taxes, energy conservation incentives, OPEC actions, inflation, oil company strategies, etc.
Keep up the great work on the show,
Xander
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Back around 2000, I used to follow the TDIclub website mentioned above, since I hoped to buy a VW TDI. I ended up getting a mini-van, but I've watched diesel vs gas prices over the years.
One thing I learned was that diesel prices vary quite a bit depending on the state. Some people would say that diesel always cost more than gas, but that wasn't true in Michigan. Another thing I learned is that diesel is usually taxed differently than gas - I think in Michigan it is an extra 4 cents/gallon for diesel.
Up until this year, it seemed that diesel was more expensive in the winter, and less expensive in summer. I never researched it in depth, but figured it was just due to greater demand for heating oil in winter. (it would typically be 10-20 cents more than gas in winter, and 10-20 cents cheaper in summer)
It didn't seem to flip around this year, possibly because the changes to low-sulphur diesel? My other suspicion is that diesel is becoming somewhat more mainstream (diesel SUVs) driving up demand.
I still hope to get a diesel vehicle someday, maybe Toyota will bring the diesel Yaris here.
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I don't know the actual reason. But, I would at least hope that Diesel is more expensive or at least higher taxed than gasoline. Diesel has a higher energy density than gasoline and thus generates more energy per volume and also more CO2 per volume. In other words, a 40mpg gasoline powered car will generate less greenhouse gases than a 40mpg diesel powered car.
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Good point about petroleum diesel. However, if you run on biodiesel, you are carbon neutral, since all the CO2 released was captured in the last year or so. It costs a little bit more, but I get some solace in knowing my dollars are not going to the middle east or the oil companies.
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I don't know that what you say is true. I have always read that diesel engines produce less green house gas. This is the reason that diesel is taxed at a lower rate in Europe than gasoline because more efficient diesel engines use less fuel and produce less green house gases. However, diesel engines do put out some additional pollutants.
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you only know diesel prices if you don't use biodiesel.
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Maybe because we made so many enemies all over the world by destroying Iraq for no reason , God or people of oil producing countries put a curse on the people of the USA.
I myself would like to see all the truckers shut down there rigs for a week before the holidays. This would give the Politicians in D.C. a job, and to get to the root of it.
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I have looked briefly at all these posts but have failed to see one factor that, usless changes have been made, raise the price of diesel fuel.
During the Reagan era, someone in government decided that too many people were cheating in their claims of diesel fuel useage (I've forgotten the particulars) so they changed the tax structure to "plug the leakhole." The tax on diesel fuel was raised for personal automotive use, aka, us thrifty users of fossil fuel.
To placate the outcry from diesel owners a "special" rebate was put in place for those of us who really had cars and not tractors or big rigs. The only catch was that the rebate was only on new cars!!!! Since I've never bought a new diesel and have the ill grace to keep them for about 20 years, that did me, and the vast majority of diesel owners no good whatsoever.
Neat way to raise taxe revenue and still claim to have not raised taxes, I thought.
So you can all thank Ron and his buddies for that one.
Does anyone know if that tax was ever rescinded?
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Historically diesel has been lower than gas. The reason the price is much more now is because diesel refineries were the ones shut down in the 90s. mainly because it is much cheaper to produce diesel than gas. There are no confounded or scientific reasons. Supply and demand
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In southwest AZ gas is $2.17/gal and diesel (car) is $2.71/gal at the Flying J truck stop. That is a significant difference! I agree with some of the earlier comments in that diesel has become very popular in the last few years. I've driven Dodge Ram diesels since 1999 and have seen both the popularity and prices rise side by side. If it's popular, folks will pay the price. Big oil...gotta love it!!
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The comments I see here are just fantastic. here's some added info today from me.
Wired News yesterday explained Hypower inc., which previewed an interesting article in Autopia about Hydrogen generators within the car. A generator efficient enough for the cars demands..Very cool indeed!
http://blog.wired.com/cars/2006/12/vehicles_make_h.html
The main pic at Hypower's site shows a Diesel truck suggesting that Industry, technology and good ole American ingenuity will attempt to think it's way out of the grips of big oil. Nice to see for a moment until the lawyers at exxon buy them out.
Just how many smart ideas can they ingest with buyouts?
Ans: as long as they can raise fuel prices indefinitely, forever!
I would hate to see us warm up to hydrogen to find it's once again controlled by these pigs.
Please keep this in mind when embracing Hydrogen.
www.eirec.com
thanks
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My wife and I just returned from a trip down to the LA / Palm Springs area with our 5th wheel and 2500 Dodge Diesel truck and saw Diesel fuel at $.30 – $.60 higher than Premium gas. Understanding that Diesel does not require the processing that gasoline requires and thus costs less to produce, I propose that the gas companies are blatantly GOUGING the American public. I’m not apposed to making a fair profit, but this is obscene. It is not only putting small business’ that rely on diesel trucks out of business, as well as the truckers themselves, but also because this country’s economy rides on Diesel trucks and trains, in the form of products and services, it forces the suppliers to raise prices simply to cover the cost of running their trucks. The excuse that they will most likely use for the obscenely high price of diesel is that they now have to take the sulfur out of the fuel. That’s fine but the same processing plus a lot more goes into refining gasoline. In my opinion, that excuse just isn’t believable. Something has to be done about it.
If I were a terrorist coming into this country (which I am not), looking for a way to cripple the American economy and hurting a lot of people, but getting very rich instead of killing myself with a car bomb, what better way to do it than to be in the position to control the price of diesel and gouge the American people. I propose that these kinds of tactics that are being imposed on America in the form of artificially inflated Diesel prices qualifies those that are setting the price of diesel as nothing more than terrorists or want to be terrorists.
That being said, what can we do about it? How about finding out who these people are that set the prices for diesel and print their names in this blog. Perhaps that will make them think twice about sabotaging the American economy and at least this way they have been exposed. If they choose to ignore our seriousness about this and don’t bring the price of diesel back down to where it should be, we will know who they are and can escalate our efforts to convince them that they should think twice before gouging diesel users.
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It is unfortunate that the general population is so ignorant of the bebfits that the economic system we live in and how it works. As for record profits, if the price of theraw material doubles and one recieves the same percenage of profit margin then one will get record profits in absolute numbers but have gained nothing in terms of percentage of sales which is the true metric of business performance. Here is an old (2004) report on oil that explains the dynamics of the market if one is really interested in understanding.
http://tinyurl.com/ywvnxd
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This has been a passion of mine for sometime and I know that you are going to be absolutely fascinated by the promise of renewable energy.
Ok, here are some alternative fuels to consider:
Ethanol or also know as E85 (which is 85% ethanol
and 15% gas) is primarily corn-based, it runs the gamut from a 10 percent gasoline additive (gasohol) that works without engine modification to E85, just 15 percent gasoline, which works in flexible-fuel vehicles. An ethanol variation, cellulosic ethanol, uses corn husks and other crop waste.
Ethanol can be produced from any biological feed stocks that contain appreciable amounts of sugar or materials that can be converted into sugar such as starch or cellulose. Sugar beets
and sugar cane are examples of feed stocks that contain sugar.
You've heard about moonshine stills? That is the same operation that would be needed to created ethanol. Some experts say
that the downside would be that it takes about 70% more energy to grow corn and make ethanol from it than what goes into the
ethanol.
A manual on ethanol production is available here:
www.energy-secrets.com
Hydrogen could be the most abundant alternative fuel.
The majority of the earth is made up of water. It does however carry inherent complexities: Hydrogen is light and tends to leak
out of containment areas. It is highly combustible, but no more than gasoline.
Biodiesel is a domestically produced; it is a renewable fuel that can be manufactured from vegetable oils, animal fats, or recycled restaurant greases. It reduces pollution by up to 75%. Biodiesel offers safety benefits over petroleum diesel because it is much less combustible, with a flash point greater than 150°C, compared to 77°C for petroleum diesel. It is the most easily made alternative fuel.
That is why I like it the best and support home production of biodiesel. Make a test batch and see if it is for you.
Get your free report here:
www.energy-secrets.com
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It's pretty clear to me that the reason for high fuel prices is the fact that we stopped drilling for new oil sources. We have relied on foreign cartel's to dictate how much they will charge us and the fact that not much is being done to design more fuel efficent engines and a differen't type of fuel. It use to be that when the demand was high the price would go down, but now think about it demand is still high and so are prices. DUA!
When people stop buying the product's the price will go down. Wan't to bet on that? We are theee Largest consumer,s of gasoline and diesel fule in the world. China is coming in a close second. If we slowed the demand down the people holding the stock would sell it off fast I bet. Now the demand would be on China and there fuel prices would go through the roof and we would see a stock crash and fuel prices would drop like a rock. they know the dollar would gain stringth because transportationfees would go down. As long as you gota have the higher things will go. Also using credit cards are really a stupid idea these days as there is no tax advantage to them and there is so much outstanding debt that it will never get paid off. Pay cash and learn to do without wanting everything you see. Maybee we can turn this mess around. The Government sure doesn't know how to run a business so we should let them dictate to us how we should. Debt is in the trillion's of dollars even though it's only paper neverless a debt. The old saying you can't squeeze blod from a turnip.
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Ther government and oil companies are basically just coming up with excuse after excuse to keep screwing everybody at the pump just so they can make more money, lots of it. In the 80's and 90's diesel was very cheap, Thus automakers started selling more diesel trucks/cars. People liked them and the market grew. When those making the money realised they were making lots and lots of money on gasoline and just lots of money on diesel they thought they should jack it up to make it "fair".
I just hope this helps drive the market for biodiesel as a cheaper alternative. It certainly has very strong potental and at least we won't be sending all our money to the middle east we will be giving some of it to the corn/soy farmers that can use it. not those who are already rich enough.
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I find it hard to believe that the passenger car market even gets noticed by oil companies - it must be a tiny amount compared to what the trucking industry uses, then and now.
And don't forget that biodiesel is a two-edged sword - the more we use consumable crops for fuel, the higher food prices will go, which will first affect the people who can't afford food.
I'm not saying we shouldn't use or promote biodiesel, I'm just saying it's not an instant panacea.
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I agree the oil companies & the auto industry don't notice the "diesel consumption" of passenger vehicles here in the US. However, their executives do well know what the impact would be if all of the sudden every american demanded a VW diesel with a model size to fit most families and get 50+ MPG. Given that, Boidiesel derived from "algae" rather than feed stocks, could very well give us our fuel, actually shrink our land used for agriculture, and at the same time increase our air quality.
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untill we all wake up and stop voting for the same crooks over and over, suck it up
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i recieved a email a while back that could work if every one would pull together saying if everyone would just stop buying fuel from just one oil company. the largest one. exon so tell all of your friends not to buy fuel from exon pass it on an just pull up to a different pump and fill up. also if our unions would get strong again we the people could control more just think if the teamsters the largest union in the united states were as strong as they once were they would just pull those biggggg trucks over and tell the oil compines and our oil barron useless prezzzzzz BUSH they aint gona keep on truckin until fuel is back to a reasonable price. whats up with the billions of dollars, record breaking profits for oil companies. hell i seen pictures just like everyone else of gas prices in irak .07 cents a gallon. this is BULLSHIT. maybe bush said let's made a deal. oil compines pay for war have control of oil when war over. EVERYONE REMEMBER NO EXON & PASS IT ON just my 7 cents
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control plain and simple
nau in process dollar collapse make way for amero.
then one world government.
price of diesel goes up everything shipped goes up .....food ring a bell
remember when russia turnd dem.
just wait homeland security my ass
more like homeland slavery
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You evidently don't know what the hell your writing about. historically deisel and home heating oil was much cheaper sometimes less than half the cost of gasoline, because the refining process is really simple almost nonexistand it's like seperating cream from milk in the dairy industry. can't be supply and demand either ther are less deisel cars and light trucks on the road than in the past so it must be good old fashioned greed you know, greed the thing that drives the american economy
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I agree with #33 post and to add,the reason why Diesel is higher than Gasoline is simple.
1. The majority of consumers who operate on Gasoline are doing less leizer travel and putting less in the tank at the pump.
This is hurting the oil companies.
2.The oil companies then raise the price on Diesel knowing that the majority who consume Diesel are the trucking Companies who have no choice than to send the rigs out to deliver our goods to the stores ect. End of story...
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Diesel is more expensive for the following reasons:
1.) Higher Taxes than Gasoline
2.) Slightly heavier than Gasoline and costs more to Transport.
3.) Demand. Diesel is essentially Kerosine which is used for home heating, jet fuel and ground vehicles. Gasoline is for cars only.
4.) Refineries are optimzed to to produce more Gasoline.
The US refineries are old and very inefficient. They refuse to invest in the latest technology unless the Gov't forces them to, like the case of 'clean fuels'. I am used to seeing process equipment in refineries that is 20 to 30 years old.
Refiners have historically done massive damage to the environment and they want to get revenge on the US Gov't and Citizens for making them spend the money to clean up. Dick Cheney has admitted this openly. Greed is not unique to the oil industry.
We will continue to import fuels and crude at an ever expanding rate unless the Auto Industry and Oil Industry make drastic changes and the citizens of the USA sacrifice.
One fact to consider: more than half of all power generated in the USA is used to make motor fuels. What could we do with all the energy if we didn't need as much gasoline?
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This may have already been said, but here is my theory. The US auto makers, although they manufacture and sell deisel powered cars in Europe,have publicly announced that they will not be marketing them here in the States. The sole exception being Daimler Chrysler. The US auto makers have been lobbying for many years to keep deisel engines out of passenger cars in the US. Even after all of the major foreign car makers said that they will be introducing deisel powered cars to the US market, Ford and GM have said that gasoline engines will power their US sold cars. Because of this lobbying, I believe that the prices are being raised to discourage us from deisel powered vehicles. When the deisel engine was introduced it was designed to run on peanut and other vegetable oil. It was only because petroleum deisel was cheaper that it was used instead. Now the market has again changed, and so should we. I have found that Biodeisel is now cheaper and is better for my engine and the environment, and is made here in the USA.
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I have switched to the Farm Diesel (red dye) and enough of the hype with sulpher...2008 was the requirement for 15ppm.
I don't have any problems with performance or any of the other non-sense theories.
If stopped by any law enforcement official chances are they are not going to check my tank with a test strip to begin with and weighing the odds of getting stopped in the first place and tested being slim; I save money plain and simple.
However, farm desiel is getting harder and harder to buy as it is getting to were you cannot pay at the pump and must go in to get interviewed by the attendent.
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The govt. split the phone co.'s and Micrisoft, why not the oil thieves too...
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I'm just coming back from a Germany vacation and boy, oh, boy, it's diesel land over there. the majority of cars seem to be small to medium sized diesel burning cars. The diesel is also several cents cheaper than regular gasoline. I just wonder what gas-milage a diesel hybrid car could get? Probably 50+ miles per gallon?
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I own a 2006 Jetta TDI and am currently paying through the nose for Diesel ($3.85 per gallon at last fillup) but on the average when traveling on interstate I am getting around 46-47 miles per gallon on a 14.5 gallon tank. That comes out to around 660 or so miles on a tank of diesel. I have a buddy that drives a pickup truck that runs on regular unleaded ($3.17 a gallon at last fillup) and gets around 19 mpg on interstate and has a 24 gallon tank. He could conceivably go 450 miles on a full tank of gas that costs him around 76.00 to fill up. Whereas, I can go 660 miles on a tank that costs me approx. 55 dollars to fill up. When Diesel was less expensive than gasoline, I was coming out ahead easily. Now, not so much. If you figure how much money is being spent per mile, my TDI costs 0.0833333...to drive per mile and the truck costs 0.1688888... to drive per mile. However, the gap is closing quickly. The gap may well be closed if you consider a car that runs on gasoline that gets better than 19 mpg which most do.
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Competition may have something to do with it. In the UK, where there are almost as many diesel pumps as gasoline pumps, a typical price comparison is Unleaded 105.9 pence/liter: Diesel 114.6 pence/liter. This is roughly $8.40/gal for gas and $9.10/gal for diesel. Where I live in NJ, gas is about $3.05/gal and diesel $3.96/gal, a much greater differential than in the UK. By the way, I spotted someone filling up in the UK in an ABC news item, and the diesel price was 37.9 pence/liter! Some ancient stock footage there!
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Here's what the government says:
http://www.eia.doe.gov/bookshelf/brochures/diesel/index.html
Just believe everything they say and it will all be fine. Drive to Washington DC to personally thank them for stifling biodiesel (only 4% of passenger cars on the road are diesel - who needs 'em?) and subsidizing ethanol, which even though it gets about 25% fewer miles per gallon than a gallon of unleaded, is beyond reproach because 'Marekin farmers can grow it with the help of Monsanto and ADM and GM can still make giant cars people don't generally need.
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Items not emphasized above:
The vehicles, boats, aircraft in Iraq are consuming enormous amounts of diesel fuel compared with pre war levels
There are reports that the railroad industry bids up the price of diesel to make it more difficult for their primary competition, which are semi-trucks who use considerably more per ton to compete
Oil companies and Detroit are in cahoots to keep the American auto market to resemble European markets which are often more than 50 percent diesel as Detroit has no answer to the Mercedes and 50mpg plus VW along with several other Japanese auto makers poised to put out highly efficient diesels in the near future
Oil companies in compliance with wishes of the Fed Gov avoid raising gasoline prices commensurate with actual costs by charging much higher prices for diesel which is primarily consumed by the trucking industry. The thinking is that the rising cost of fuel is less noticible in the cost of shipping goods than it would be at the gas pump if motorists had to pay the ever inflated price there.
Take your pick!
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A lot of it has to do with refineries just now coming back on line from Gulf hurricanes. Also, they charge so much because they CAN.
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Strange how Gulf storms have never been a factor in the past. Seems to be just another excuse to jack the people.
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I listened to an oil representative being interviewed on a radio talk show. This is what he said about the higher cost of diesel.
A few years ago the oil refining industry decided to price fuel based on the amount of energy per gallon. That was his answer.
So, what it amounts to, in my mind, is price gouging. Has nothing to do with the cost of production. It has to do with the amount of energy in a gallon of diesel compared to a gallon gas, according to that person. I think the show was aired on KGO radio here in the San Francisco bay area.
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I have a theory on the high price of diesel compared to what gasoline has done.
Let see what ya-all think!
The US automakers have NO diesel powered passenger cars. The Japanese & VW have wonderful 70 mpg diesel cars, mid to sub compacts. But they require low sulfur diesel fuel, that why we don’t have them here in the US now.
But now we have low sulfur diesel fuel in the US. And if these Honda and VW cars come into this market, the US auto makes will loss what little percentage of the passenger car market they still have, if diesel fuel prices where anywhere near gasoline, it would be an easy decision to buy one of these new diesel cars coming in from Europe or Japan. But as long as the price is so high for diesel, American passenger car buyers will still buy gasoline powered cars.
Until the US automakers have real diesel powered passenger cars they can sell you (not promised concept cars like the Volt) the price of diesel will stay much higher than gasoline. This will be years as we don’t have the experience in building small diesel engines. We might lead the industry in industrial grade diesel technology, but that is a different discipline, the Europeans and Japanese once again are very much ahead of us on this. I think Ford has had a diesel powered Focus in Europe for years, may this could be Americanized to sell here?
What do you think?
Tim
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Just a quick note, keep in mind that the big 3 are making diesel passenger cars. The only thing is, they are not for sale in the US. Look up the US auto makers European web sites. I saw in the news recently, that some of these cars are being made here in the states and then shipped overseas, and the workers are upset that they are not allowed to buy these cars. I saw anews clip with one of the heads of GM, who said that their diesel powered cars are getting 25% better fuel eefficiency than gas powered cars, and the diesel hybrid is getting 25% better that that. In fact, the fuel efficiency of these cars is much better. Sounds like they are either trying to down play the efficiency of the diesel cars, or they are going to sell us cars with worse fuel efficiency when they do decide to sell diesel cars here.
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this should be the moto for biodiesel
lets starve the world, to power our cars
because there is no way biofuel will ever be able to sustain us, it would take 98% of USA covered in farmland to produce enough boifuels to power us at our current usage. the only truely viable source of renewable energy we have is electricity, it would only take about 1/4th the state of arizona covered in solar panels to power our entire country.
back on topic tho, diesel as far as i can remember has always been cheaper then gas, it wasnt until a few years back that diesel passed gasoline, in 1994 i could fill our work truck (33 gallons) for less then 30 bucks, now it takes roughly 160 bucks to fill it.
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See Tim's comment.
This country is filled with millionaire's and billionaire's that just love their money.
Do you really think there is any reason for diesel (or gas for that matter) to be as expensive as it is outside of the oil companies wanting money?
They are jacking the prices to make every penny they can before 100-200mpg cars come out or we change all electric.
Its simple; the price is high so that their bank account will be as well.
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So when you sell something you own, bought, or created, what price do you ask??
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Terrorism
Noun
1. The systematic use of violence as a means to intimidate or coerce societies or governments.
Violence
Noun
1. An act of aggression (as one against a person who resists); "he may accomplish by craft in the long run what he cannot do by force and violence in the short one".
2. The property of being wild or turbulent; "the storm's violence".
3. A turbulent state resulting in injuries and destruction etc.
Aggression
Noun
1. A disposition to behave aggressively.
4. The act of initiating hostilities.
5. Deliberately unfriendly behavior.
Source: WordNet 1.7.1 Copyright © 2001 by Princeton University. All rights reserved.
I submit to the jury that the oil companies and Cyberdyne are terrorists against humanity.
I forsee martial law worldwide and SkyNet running the world.
Keep out of sight, keep moving!
Fight the good fight!
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Keep in mind that Trucking companies pay far less than pump prices. They negotiate in advance for millions of gallons that their fleet will use.
Until humans find cheap renewable energy sources for the coming 10-15 billions souls on Earth, prices will continue to rise.
I hope "Soylent Green" is not in our future. Set in the year 2022, Soylent Green depicts a dystopian future in which the population has grown to unmanageable numbers and starvation and death are common. However, those in power and wealth do not suffer.
Hmmm, funny how history repeats itself.
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I drive a gasoline car. If one must be more, I am glad it is diesel fuel. I say this, in the sense that much of diesel consumption is used to distribute goods across the country. The difference in price can be distributed among the distributed goods as a nominal increase of price among several types of consumer goods. I may pay more for fresh apples, but I save money getting to the store. I save even more if the store is down the block and I can walk to it. It sucks for independent trucking though ;(
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http://www.eia.doe.gov/bookshelf/brochures/diesel/index.html
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The answer is relatively simple if you bother to read the Wall Street Journal. Diesel prices will remain high so long as U.S. refineries ship back the surplus medium distillates (diesel 1 or stove oil, diesel 2 or truck fuel, and kerosene for jet fuel are all medium distillates). That surplus is going to the Saudi's who do not have a refinery capable of refining medium distillate.
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Just my two cents worth.
People are very sensitive to gasoline prices. If the price becomes painful enough people use less. The price of oil has gone up more percentage wise than the price of regular unleaded gas in the last year. The price of rug has seemingly been held down in the hopes that consumers will still use as much as possible. With rug, it is the consumers choice how much they use, all within reason of course. Look at mid grade and high grade fuel. There used to be only a 10 cent difference between grades, now it is much more. The people that have to use mid or high grade don't usually have an easy choice.
Ok, back to diesel. I do NOT believe the current over pricing of diesel fuel has to do with popularity or refining costs at all. The price of diesel fuel is what it is to make up for the low price of rug. Again it is back to choices, for the most part, those consumers that use diesel do NOT have a choice and will pay whatever the price is. The price of diesel, it would seem, is not as sensitive. The users of diesel fuel can pass off there higher costs to the end-user of there services. (The average consumer of rug can not do this) This is bad news for independent truckers. Many are going out of business. The trucking business has become so competitive that raising costs will only insure that your current trucking customers go elsewhere. The only companies that can in fact pass on these highers costs are the larger trucking companies. The other concern is heating oil. MANY older homes and homes in cold climates in the U.S. use heating fuel. These people are in for a world of hurt this winter.
Regards,
Bryan
again just my 2 cents worth. Diesel is more
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can i use diesel fuel with fuel oil ,mix them togather
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Sorry I don't have references - I copied this information off the net for my use, but I don't have the reference location for you to find it yourself.
Part of the reason why diesel costs so much has to do with how the petroleum is refined.
Any refinery can alter their processes to produce different ratios of products, within limits of the chemistry involved. And the source of the oil makes a difference too - "light sweet crude" is easier to refine into lighter components (like gasoline) than heavier crudes produced in Venezuala, for instance. But within the boundaries of the source of oil and the refinery, there are differences between how the U.S. and the rest of the world uses their refineries.
The U.S. uses mostly Fluidized Catalytic Cracking processes in refining. This is because this maximizes the amount of gasoline which is produced. On average in the United States (the internet source I told you I copied used 1995 data) produces 19.5 gallons of gasoline from a barrel of oil. That percent seems to have maybe even increased a little - more recent data (see www.eia.doe.gov) suggests we now turn about 50% of our crude oil into gasoline - and yet this is still not enough as the U.S. imports pre-refined gasoline too.
Europe, however, uses Steam Cracking or Hydrocracking, which are not as good at producing the lighter components and instead develops more heavier oils - in other words: more diesel. The U.S. turns about 25% of its petroleum into heating oil and diesel, but Europe gets about 40% - plus 3 times as much heavy fuel oil (used in very large diesel engines - 15% vs. 5%) - but in exchange for this extra production for oil-burners, Europe only changes about 25% of its crude oil into gasoline. Which is still too much for them, and this is where the U.S.'s gasoline imports come from.
So in the U.S. there is a fundamental relative shortage of diesel - a barrel of oil produces 19-20 gallons of gas, but only 9-11 gallons of diesel, and the only way to make more of it would be to cut into the amount of gasoline which is made (to the tune of raising the gas prices for the 240 million gasoline motored vehicles in the U.S.) - PLUS the only way to really make a significant change in these percentages would involve reworking the U.S.'s refineries somewhat, at the cost of billions of dollars which, I think, the petroleum industry has indicated it has no interest in doing.
So the only method left of increasing diesel supply in the U.S. (and fuel oil, for that matter - winter will be expensive for the oil-burning homes in the Northeast) in order to lower prices is to import the diesel - and there isn't much out there to import as diesel is the standard of the rest of the world for powering anything that moves - especially in those growing 3rd world economies (especially China and India) that are buying all the diesel they can get.
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There was an article summary I had posted a couple of days ago regarding this same topic. You can read it here:
http://storagetanks.wordress.com
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All of the points I've read here are true but nearly all have nothing to do with the price of diesel. I work for a small refiner and my experience is that the price we fetch for our products(diesel, gasoline, jet fuel, etc) is only indirectly connected to the cost of production. We and every other refiner I know try to maximize profit by charging as much as we can, and we raise prices until we lose sales or market share to a competitor. That is good business practice. Likewise, if we are being undersold, we lower prices to get that market share back. It has absolutely nothing to do with the cost of producing diesel vs. gasoline.
So, why is diesel so pricey? First, the cost of crude oil gives all refiners the same incentive to raise prices to recover that cost w/o losing sales. Second, diesel demand is literally exploding. Due to energy and tax policies in Europe, more than 50% of new vehicles there are diesel. Also, diesel is an industrial fuel, and China and India are industrializing very quickly - think trains, big trucks, construction equipment, electric turbines, etc. If diesel prices in this country were any lower, the fuel would be snapped up, loaded on ships and exported overseas as a less expensive alternative to domestic supplies in foreign countries. So, diesel prices here are just where they need to be - as high as possible without inviting imported competition yet still high enough to discourage exportation to the high-demand international market. The actual cost of refining has very little to do with this pricing mechanism.
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BEST REPLY FOR THE PRICE OF DIESEL
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DOC, I liked your response. However as far as diesel use exploding and referencing Europe, Diesel cars there have been sold in those quantities for some time now, it is nothing new. Diesel use in China increasing, I can see that and would agree. The points you make, in my opinion mesh very well with my original points. Most diesel fuel use in the U.S. is not by choice and those users will have to suck up whatever prices are given. In an effort to recoup 'low' prices on gasoline, prices on diesel have been raised. You can see the same pricing strategy between the gasoline grades. When gasoline is more price sensitive than usual, prices between grades exceed the normal 10 cents per gallon. You will see regular at lets say $2.00, mid at 2.12 (normally would be 2.10) and high test at 2.25 (normally at 2.20). This strategy lowers the price of rug. I see the same price strategy on diesel. Diesel is higher to make up lost profit on gasoline.
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The rest of the world uses more, the pie is smaller, I seen that happen with concrete in 2004-2005 when in 2000 a 10 yard truck was about $600 in 2005 it went to over $1200 a Load "china". also drivers in europe are buying diesel cars and suvs and trucks at over 60% now , oil tankers that should have unloaded there diesel here were going to europe. I just read exxon is going to ramp up another 10% on diesel fuel it would have helped some if they had done that in 2005 but not to the degree of it going to $5.39 a gallon in july in new york state. Greed and supply and demand all the factors.
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Diesel price is not the only thing that's politically malipulated for bullshit greed reasons. I seriously doubt airlines are paying $5.00 a gallon for JP4 jet fuel but that's just what homeowners in Michigan currently have to pay to fuel space heaters that burn K1 kerosene. I remember several years ago they used to put red dye in the K1 intended to be sold as heating fuel. It would gum up the wick on the heater and cause you to have to replace it every couple of months if you didn't weant a terrible stink from running your heater.
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They are "value" pricing, Diesel, altho cheaper than gasoline has more BTU's. Its simply control the distribution, and make huge profits. My company is intent to commercialize a high effiency, low cost, multifuel, engine, including fuel sourcs of diesel, or biofuel, home heating oil, or gasoline. We are looking at mobile generators, as well as transportation engines. The only solution to high prices, is high efficiency. (Then as demand goes down, further price decreaes will follow)CEO Sannerwind@gmail.com
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Higher Gasoline Mileage Leaves Gasoline's By-Product, Diesel, More Expensive
I vaguely remember reading that rather than produce diesel directly, diesel is usually produced as a by-product of gasoline production.
Over the decades,
as gasoline vehicles got better mileage, the proportion of diesel/gasoline usage increased.
Since diesel remained a by-product of gasoline production, the price of diesel increased.
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if refineries switched over to diesel only they would run several percent more efficient. Gasoline production also causes explosions, every year like clock work, its volatile. Diesel being less volatile is cheaper to make.
Diesel can also be produced from fossil gases, biomass, and waste bioproducts - cheaply. You can grow you own diesel fuel, but not gasoline, that can be a true paradigm shift -- self sufficient artisanal farms. In some oil producing regions, such as Algeria, sweet crude can be put directly into the big CAT diesels and runs real well.
When you have only a few bigs that control the importation, refinery, distribution, and citizens with profound disinterest in how things work, could work, economics, basic engineering and science, what do you expect? Those who control the channels, resources, engineers, give marching orders will extract as much profit as possible. Consider Oil went from $140/bbl to under $50/bbl. Did the price of petro products follow suit? It did going up, but,not down. Capitalism is great, but we need to apply it to energy where the benefits are broadly conferred. HR Sannerwind@gmail.com We hope to introduce a 150MPG vehicle/ engine, so regardless of some overpricing, the cost of transportation and mech power will be greatly reduced, and oil dependence severed significantly
ave, the trillions of dollars of US capital sitting abroad is because we threw away manufacturing.
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I drive a TDI bug. I just got home from a 500 mile trip east. Prices varied for diesel by 30 cents across three states, but not by state. often the price was 20 cents higher at the station next door. Except for a private station, not associated with any chain, located 15 miles south of terra haute IN. They sell only diesel, and are able to sell it at 30 cents lower then the next lowest of any chain store.
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Market forces are no doubt part of it. However, consider this. High gas prices directly affect voters which could affect regulation. High diesel prices are mostly borne by the transportation industries which then pass those costs unseen to the voter. So, to make large profits while not arousing too much voter angst, it's much more clever to raise the price of diesel. Consumer vehicles are relatively few and energy producers don't care if a few transportation companies with fixed price agreements get squeezed out of business.
Price is somewhat supply and demand. A big energy company has to maximize profits on the combination of all its products, not on each one individually. In other words, we're likely getting gas at a discount.
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Thanks to those who posted real information on this question -- i.e., those who managed to keep four-letter words and the words "greed", "gouge", and "criminal" out of their posts. Lee Anne (#2), shermytank (#56) and a couple others were really helpful.
The guy who was beside himself (#13) because NPR would dare to put on someone who actually understands energy production for a living -- i.e., an OIL COMPANY EXECUTIVE -- was a crack-up.
Paul King (#26) should be given large quantities of sedatives for his own good and ours.
Kyle (#49): remember to wear your tinfoil hat.
To Sannerwind, who envisions us handcrafting "artisanal" fuels in thousands of farms, all I can say is please, please tell me you're working with your own money, not mine via government grants or subsidies. The loss of efficiency in this process, compared to what we have now, would be staggering.
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