Diesel price ~same as Gas: Why?

[nomad_289]

Diesel is now within a nickle of the price of Regular. ~1%
A year ago there was about dollar difference. ~25-33%

Other than seasonality, What has changed and will it persist?

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A thread a year ago High cost of Diesel

HJGyswyt wrote:
WHY DIESEL COSTS MORE THAN GASOLINE

Diesel fuel had traditionally been less expensive than gasoline, since it was easier to refine from crude oil. However, beginning in 2004, retail diesel fuel prices have consistently been higher than retail gasoline prices. There are several reasons why.

Seasonality is one factor that had always affected diesel fuel prices. Diesel fuel, also known as number 2 distillate, is essentially the same as home heating oil (the major difference is that diesel fuel contains less sulfur). In colder winters when home heating oil is in more demand, diesel prices typically climbed faster than those for gasoline.

Also, beginning in September, gas demand declines, but diesel fuel demand increases as more diesel fuel is required for the machinery to harvest and transport crops.

(There are some differences between the more common distillate fuels. Off-road diesel, intended for farm machinery and other non-transportation purposes, is dyed red to distinguish it from on-road diesel, which has both state and federal transportation taxes. Home heating oil is very similar to both diesel fuels but contains more particulates, which would damage a sensitive diesel engine if used in a vehicle.)

While seasonality has long played a role in demand, the more recent change in market dynamics, where diesel fuel is consistently more than gasoline, is a function of several broad factors.

Strong Diesel Fuel Demand in Other Countries
The United States is a gasoline-dominant motor fuels market. Approximately 98% of passenger vehicles in the United States are powered by gasoline, with fewer than 2% powered by diesel fuel. Consequently, the refining infrastructure is designed for optimum efficiency in producing gasoline. From a typical 42-gallon barrel of oil, the refining process delivers around 18 to 21 gallons of gasoline and 10 to 12 gallons of distillate, plus some other refined products. Refinery yields can somewhat be tweaked, but to produce significantly more distillate, they would need to undergo significant upgrades costing billions of dollars.

While the U.S. remains predominantly reliant on gasoline, other countries throughout the world are more heavily reliant on diesel fuel. Diesel fuel is used in the majority of new passenger vehicles in Europe. Strong international demand for diesel fuel €" for both passenger vehicles and for industrial machinery in the rapidly growing developing countries like China and India €" has placed a premium on diesel fuel imports.

U.S. Diesel Demand Increasing While Gasoline Demand Decreases
While U.S. gasoline demand has decreased since peaking in 2007, demand for diesel fuel has remained strong. Diesel fuel powers most of the country's buses, trucks, trains and farm equipment. It also powers an increasing number of passenger vehicles. U.S. clean diesel vehicle sales increased 25.6% in 2012, almost double the overall auto market's increase.

More diesel-powered vehicles mean more demand for diesel fuel. Comparing October 2010 demand to that of October 2012, demand for gasoline has decreased 3.4% while demand for on-road diesel fuel has increased 11.8%.

Introduction of Ultra Low Sulfur Diesel (ULSD)
ULSD is a clean-burning diesel fuel that is defined by the Environmental Protection Agency to have a maximum sulfur content of 15 parts per million (ppm). It was gradually phased into the market between 2006 and 2010, replacing the on-highway diesel fuel, known as Low Sulfur Diesel (LSD), which can have as much as 500 ppm sulfur content. In 2010, on-highway diesel fuel was 100 percent ULSD. ULSD is required for use in model year 2007 and later vehicles, which are equipped with advanced emissions control systems.

There are enormous environmental benefits to ULSD, but there are also logistical challenges. Special care was required when transporting both types of diesel fuel during the transition. This included pipelines, bulk terminals and tankers. A batch of ULSD that has even slight contamination with LSD could lead to significant fines if the batch of ULSD exceeded a certain level. In addition, to produce ULSD the refining industry had to invest approximately $8 billion in infrastructure upgrades and the daily production costs for ULSD are higher than LSD, since the fuel requires more refining. This influences the cost of all diesel and results in a premium for ULSD, which is estimated to add about 10 cents per gallon to the cost of diesel fuel.

Taxes
The final factor in why diesel fuel prices are higher is taxes. The federal tax on diesel fuel is 6 cents more than gasoline per gallon (24.4 cents vs. 18.4 cents). The last increase in the federal tax was in the early 1990s, back when diesel fuel was usually less expensive than gasoline. Taxes do not factor into why diesel fuel prices are higher than gasoline today €" strong demand and USLD are the causes €" but taxes are a factor in overall prices.

[GoPackGo]

I've been in S. California since 1 May and am flat out amazed that diesel is sooo much cheaper then gas. I think the difference was about a dollar/gallon in Lake Elsinore when I filled up and now about .50/gallon here in Visalia. I just figured the taxes were different.

Have also seen propane price of $1.59/gal which was about 1/2 what I paid in the Phoenix area.

Tim

[Dtank]

nomad 289 wrote:
Diesel is now within a nickle of the price of Regular. ~1%
A year ago there was about dollar difference. ~25-33%

Other than seasonality, What has changed and will it persist?

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"What has changed and will it persist?"..:R

Break out your crystal balls (one for gas one for diesel).

The answer is there..:S

.

[bobsallyh]

Off I-15 at NV. Rt 160 (Blue Diamond Hiway) in Las Vegas at Truckstops of America diesel the other day was $3.09 cash. Just west of there going toward Pahrump there was diesel for $2.79-$2.89 and was 10 cents cheaper than unleaded.

[Raften]

Don't worry, it won't be cheaper than gas for too long. The world runs on diesel.

[wanderingbob]

Not 40 cents apart in Tallahassee , only 6 or 7 cent apart .

[restlesswind]

Diesel here in Sacramento CA is the lowest price on the menu. Still higher than a lot of areas,at 3.199 cash price.
I liked Mesa AZ better.2.499 when we left there last week.
It's been a long time sense I've seen diesel lower than regular gas.

[Water-Bug]

Big Katuna wrote:
Still 40 cents apart here in Floriduh.

No heating oil influence in Florida.

[travelnutz]

Both are averaging the same price here in West Michigan. Moves around a couple cents below to a couple cents above but averages almost exactly the same to the penny. Different brands have different prices but we can always find several in the $2.50's with the advertised/sign price and then depending on what discount cards etc you have, the price you actually pay may drop another 5 cents to 15 cents/gal.

We have a diesel truck and a couple gas SUV's and our boat also uses gas. The diesel truck is the winner by far! Just got back from 2+ weeks at the Smokies in Tennessee/North Carolina (approx 760 miles each way) and got 13.51 MPG (hand calculated) for the trip with the Dmax crew cab 4X4 pulling our 12,840 lb scale weighed Carriage Carrilite 5th wheel.

[tkcas01]

kaydeejay wrote:

tkcas01 wrote:
For what it is worth, here is a timely article from cars.com.

https://www.cars.com/articles/why-diesel-prices-are-steadier-than-regular-gas-1420680428546/

I guess the writer has never heard of #1 and #2 diesel? He states that it's the same year round?
Not in the snow belt it isn't.

That's why I made the disclaimer of what the article might be worth. :E

As an afterthought, the current prices may be due in part to reduced gasoline refining capacity. Do a "google" for "refinery fire" and you will find:

• Explosion at Exxon LA-area refinery - Feb 2015
• Extensive damage at Husky Ohio refinery after explosion, fire - Jan 2015
• Fire at Washington State Oil Refinery - May 2015

Or, maybe a knat passed gas. 😮 Kinda like the crazy stock market, they can find any reason to raise prices.

[gwalter]

Gas and diesel are both 2.49 here in Colorado Springs in most places. I have seen diesel for 2.46 also.

[Golden_HVAC]

I was planning a trip on Gasbuddy.com and see that the price of crude oil is up to $59 a barrel.

You can check on gasbuddy.com and see what the prices are locally and planning a trip. I think the problem is the oil companies are charging more for the 'summer blend' to lower the CO2 emissions (So thank the Sierra club). Winter blend gets better mileage and is less expensive to produce.

Fred.

[kaydeejay]

tkcas01 wrote:
For what it is worth, here is a timely article from cars.com.

https://www.cars.com/articles/why-diesel-prices-are-steadier-than-regular-gas-1420680428546/

I guess the writer has never heard of #1 and #2 diesel? He states that it's the same year round?
Not in the snow belt it isn't.

[Big_Katuna]

Still 40 cents apart here in Floriduh.

[tkcas01]

For what it is worth, here is a timely article from cars.com.

https://www.cars.com/articles/why-diesel-prices-are-steadier-than-regular-gas-1420680428546/