$1 difference between gas and diesel, WHY ??
The best I can remember, when diesel was $4.00 a gallon, wasn't oil something like $110 a gallon? Now oil is around $60 a gallon and diesel is around $3.75 here in central CA. Can someone explai...
Forum Discussion
Oil was never $110 a gallon. I don't remember it ever reaching $110 a barrel (42 gallons). Product prices go up and down with crude oil prices, but prices for which product go up and down with supply and demand. Diesel is the same fraction as fuel oil for heating and electrical power generation, demand changing seasonally for both markets, tending to be higher in winter. Gasoline demand peaks during summer months with vacation travel and heavy use of automobile air conditioning in stalled traffic.
In fractional distillation, the proportion of different fractions (gasoline, jet fuel, kerosene, diesel and fuel oil) depends mostly on the crude oil input, but can be adjusted by more expensive secondary processes to produce more of one fraction than another.
Thus diesel and fuel oil cost less relative to gasoline when gas is in higher demand and more costly methods are needed to produce it, but the balance shifts in the other direction when fuel oil is needed for heating and electric power generation, and gasoline is been sold out over overstocks.
Add to this, the markets are global. Crude production is global, refining is global, consumption is global. Transportation costs are on the order of 1/10th of production and refining costs, so the seasonal cost of diesel fuel in California might be determined by the market for fuel oil in China.
In fractional distillation, the proportion of different fractions (gasoline, jet fuel, kerosene, diesel and fuel oil) depends mostly on the crude oil input, but can be adjusted by more expensive secondary processes to produce more of one fraction than another.
Thus diesel and fuel oil cost less relative to gasoline when gas is in higher demand and more costly methods are needed to produce it, but the balance shifts in the other direction when fuel oil is needed for heating and electric power generation, and gasoline is been sold out over overstocks.
Add to this, the markets are global. Crude production is global, refining is global, consumption is global. Transportation costs are on the order of 1/10th of production and refining costs, so the seasonal cost of diesel fuel in California might be determined by the market for fuel oil in China.
