Gasoline $1.70, Diesel $2.80 : why?


#1

I noticed that gasoline was $1.70/gallon, diesel $2.80 - I remember when diesel was cheaper, when there were even little cars with diesel engines (a friend bought a diesel Rabbit in the '70s). Why has diesel become so much more expensive? Aren’t they made from the same feedstock, by the same methods as before?


#2

The disparity has been mostly a result of differences in taxes.


#3

And it depends where you are, in southern CA the difference is more like $0.30, in Dallas around $0.60. Where are you?


#4

No. Taxes haven’t changed since this summer, when Diesel was the same price as the middle grade gas.

When ever gas prices fluctuate (up or down), Diesel prices go up. It’s been doing that for over a decade. In fact you can probably find a reply from me saying the exact same thing several times over the years. You’ll see that gas prices stabilize, that Diesel will come down.


#5

Although the cost of supplies and processes are factors in the price of an item, they’re not as big an influence as supply and demand.

Something else to consider: Because diesel fuel is used by industry at a higher rate than gasoline, its price is less elastic. In other words, an increase in the price of diesel doesn’t lessen demand for diesel as much as an increase in the price of gasoline lessens demand for gasoline. The demand curve for Diesel is not as steep as the demand curve for gasoline.

Also consider that, as the US has increased its oil output, it has increased refining standards for diesel fuel almost simultaneously.


#6

Prices all track each other:


#7

That is the answer. It is actually less expensive to refine diesel than gasoline.


#8

I know it used to be that way, but is is still true now that over-the-road diesel fuel is ultra low sulfur diesel? Diesel fuel isn’t the brown sludge it used to be. It looks about as clear and refined as gasoline does.


#9

Here’s the difference in price over time:


#10

Coincidentally, U.S. began phasing in ultra-low-sulfur diesel in 2006.


#11

Gee I remember when diesel was 21 cents. Back when I had my Olds its was a little cheaper than gas but then got more expensive.


#12

Regular gas was 20.9 or 21.9 for a little while in Appleton, WI, summer 1971, IIRC. I don’t remember the diesel price then, but in that era diesel was usually cheaper than gasoline, wasn’t it?


#13

New Mexico taxes gasoline 17¢, diesel 21¢


#14

Diesel fuel is also pretty much the same as heating oil. There are still a few people out there with oil burners, so the demand goes up during the winter.


#15

There are also more goods moving by truck or train than ever before increasing demand for diesel. Transporting goods from China is a lot more costly than distributing goods from plants already in this country, especially if the manufacturer has multiple plants here.


#16

And because of the difference in tax between the 2, savvy dieselers install a huge tank under their yards, buy in the summer for the whole year, fuel their cars from it.


#17

Savvy and dishonest if they’re buying untaxed dyed off-road diesel fuel to be used on public roads.


#18

A few? Over half of NH (including me) uses oil. Only the big cities have NG. And mid-size cities in NH have NG, but only at town center. Very few small towns (if any) have NG. Many towns in NH ban propane tanks from being buried in the ground, so people opt for oil because they don’t want those ugly huge tanks in their yard.


#19

I would hope that using non-taxed fuel is not a real common thing. I’m not sure what the mechanism is but I do believe there are folks looking at fuel usage compared to what it should be. Back in the day my FIL had a tank for farm use but he restricted fueling up future son in law’s cars because he said “they” know pretty close how much should be used for the type of farm operation he had. I don’t think it was dyed though and it was in South Dakota. Maybe he just didn’t feel right about it, I don’t know.


#20

And that tank can leak into the groundwater.