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Old 08-21-2011, 10:04 PM   #1
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gas vs. diesel prices

What do you believe is the reason that at some stations diesel is as much as 30 cents per gallon higher than regular gasoline? Diesel is cheaper to produce than gasoline. My feeling is because trucks must use it and can then pass the cost on to consumers. Do you see any other reasons for this higher cost?
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Old 08-21-2011, 10:17 PM   #2
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Originally Posted by johnmark View Post
What do you believe is the reason that at some stations diesel is as much as 30 cents per gallon higher than regular gasoline? Diesel is cheaper to produce than gasoline. My feeling is because trucks must use it and can then pass the cost on to consumers. Do you see any other reasons for this higher cost?
GREED?
Diesel is easier (cheaper), to produce, more can usually be made from a barrel of crude, and they're found that people will buy it at the higher price anyway.

Some years ago I saw an article in Popular Science or Popular Mechanics that said the fuel companies should price gas and diesel according to the btu's of energy they contain. Diesel has more btu's so the companies are just charging by the higher energy content, that's all
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Old 08-22-2011, 08:32 AM   #3
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After having worked 27 years in the oil refining business it never ceases to amaze me that people still think diesel is cheaper to produce then gasoline. Maybe it is the lack or organic chemistry. If you were making bunker fuel or marine diesel possibly. Ultra low sulfur diesel? Think about it. How do you get the sulfur out of the crude? It takes more energy "to boil oil" then it does to "boil" (crack and distill) gasoline. Don't get me wrong, I too think there is way too much greed in the industry. All the way from the geologists through to the station owners. As a footnote, do you know who the largest consumer of non E.P.A. mandated Ultra low sulfur diesel is? It is the federal government. Now there is another group where greed is rampant.
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Old 08-22-2011, 08:42 AM   #4
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When federal and state road taxes (tax/gallon of fuel) are considered, diesel is usually taxed at a significantly higher rate than gasoline. Part of the reason for this is political populism (more voters use gasoline than diesel), and part of it is because diesel fuel is generally used by larger, heavier vehicles that the governing bodies consider to cause more road damage. This, of course, ignores the reality that these larger vehicles get fewer miles/gallon, thus would pay more per mile traveled if the tax rate were the same for gasoline and diesel, but that's the way it is.

Another reason is that, unlike Europe, our government discourages the use of diesel technology not only through higher taxation but also with emissions standards that target the weak spots of diesel engines - NOx and particulate emissions. On the other hand, Europe promotes diesel vehicles as the EU member countries tax diesel at a lower rate than gasoline and have emissions standards that target greenhouse gases (CO2, primarily) where the diesel has an advantage over gasoline engines. Thus, and because they get better fuel economy, we see a much higher percentage of diesel passenger cars on the road in Europe than the U.S.

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Old 08-22-2011, 09:02 AM   #5
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Travel in Canada, Diesel there is generally less the Reg Unleaded Gas, where here in NY Diesel is generally higher the Premium Gas. Makes you wonder doesn't it.
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Old 08-22-2011, 09:32 PM   #6
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I think RustyJC hit the nail on the head - it is mostly gov't policy. US production of diesel is relatively low for the reasons he cited, so demand is always high relative to supply and the price stays up. Meanwhile, the feds keep an artificial pressure on the oil companies to keep gas prices fairly low so the voters don't get up in arms.

I would like to see expanded use of diesel fuels in all US vehicles. Then you would see refineries switching from gasoline to diesel production and the price differential would soon reverse.
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Old 08-22-2011, 09:52 PM   #7
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EPA way to powerful !! Need to have there wings clipped,always go after the deep pockets and run up the price of everything !!!!
If not for the subsidy for Ethanol the price of 10% fuel would be higher then Diesel.
Then you figure in the cost of the damage done to gas engines by the ethanol.
The general public has no clue to the real cost of what this fuel causes and the not so bright C and C thinks increasing it Ethanol level to 20% is a good idea.

LOL Dick.
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Old 08-22-2011, 10:24 PM   #8
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I wonder if we will get sub $2.00/gallon diesel when President Bachmann gets into office.
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Old 08-22-2011, 10:40 PM   #9
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Good explanation maverick BBD,but I too was under the same misconception only because Ive heard it said by various "media" for years now
Unless i ever heard different,I assumed it was correct.

Makes me wonder though....
prior to about 1978 or 80 as I recall, Diesel was always cheaper than gasoline.
Thatas what i recall. Thats one reason I bought new a 1979 diesel rabbit and a 1980 isuzu diesel pickup . Only to see the price creep up afterwards.
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Old 08-22-2011, 11:13 PM   #10
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In smaller words and less paragraphs, its GREED. Simple answer. Lots of GREED.
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Old 08-23-2011, 07:53 AM   #11
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In smaller words and less paragraphs, its GREED. Simple answer. Lots of GREED.
If you make a simplistic analysis of the situation, you can come up with a simplistic conclusion. Unfortunately, the truth is much more complex than a one-word summation. You might want to re-read the posts preceding yours.

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Old 08-23-2011, 08:00 AM   #12
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There are some things about the pricing that do not make sense. One thing that does make sense is that the price of diesel exceeded gas when the new EPA requirements came into play. What doesn't make sense to me is the differential. When the station next to my office had gas at $4.09 and diesel at$4.29 when the gas prices peaked. The differential was $.20. Now gas is $3.79 and diesel is, are you ready, still $4.29. The differential is now $.50 a gallon. That doesn't make sense to me.
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Old 08-23-2011, 08:11 AM   #13
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You might want to bookmark this LINK. Notice the Oil (cents/gallon) section. Wholesale diesel prices (exclusive of transportation, taxes, distribution costs, profit, etc.) track very closely with the NYMEX heating oil future. Wholesale gasoline prices, by comparison, track the NYMEX RBOB gasoline future. (NYMEX = New York Merchantile Exchange, one of the largest energy trading floors.)

Even at the futures level, diesel is trading higher than gasoline. With current economic conditions, it's likely that gasoline demand has dropped, but diesel hasn't to the same extent. Did you know that the U.S. exports diesel to Europe and imports gasoline from European refiners due to the differing market demands of the two markets?

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Old 08-23-2011, 12:54 PM   #14
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You might want to bookmark this LINK. Notice the Oil (cents/gallon) section. Wholesale diesel prices (exclusive of transportation, taxes, distribution costs, profit, etc.) track very closely with the NYMEX heating oil future. Wholesale gasoline prices, by comparison, track the NYMEX RBOB gasoline future. (NYMEX = New York Merchantile Exchange, one of the largest energy trading floors.)

Even at the futures level, diesel is trading higher than gasoline. With current economic conditions, it's likely that gasoline demand has dropped, but diesel hasn't to the same extent. Did you know that the U.S. exports diesel to Europe and imports gasoline from European refiners due to the differing market demands of the two markets?

Rusty
Interesting perspective Rusty. I never really looked into the trading aspect. Thanks for adding that.
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