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Why Is Diesel Fuel So Expensive? - READ ONLY

35 messages,  Last post on Jun 20, 2008 at 6:45 AM

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What is this discussion about? Diesel

Messages Page 4 of 4

#26 of 35 Re: Why Is Diesel Fuel So Expensive? by hpmctorque

Jun 04, 2008 (8:09 am)

The Wall Street Journal features an article about once a week entitled "Me & My Car", in which columnist johnathan Welsh answers readers' automotive questions.
 
In today's edition of the Journal, in Section D, page 4, a reader from NJ asks, "Why has diesel fuel become so much more expensive than gasoline?..."
 
Welsh answers, "The price of diesel fuel has been generally higher than the price of regular gasoline since September 2004 and is now more expensive than premium. International demand is the mains reason that prices are high today. Growing demand in China, Europe and the U.S. is putting pressure on strained global refining capacity. The move in the U.S. to ultra-low-sulfer diesel during the last two years has also led to increases in the cost of diesel production and distribution. The federal excise tax on diesel fuel is six cents higher per gallon (24.4 cents per gallon) than the tax on gasoline..."
 
although these reasons have been cited in some previous messages, I thought that posting Welsh's answers relating to this discussion would be worthwhile, since the WSJ is generally considered to be a reputable source.

#27 of 35 Here is a VERY GOOD EXPLANATION by larsb

Jun 04, 2008 (8:59 am)

This page does a fine job of explaining the current diesel price scenario:
 
What every consumer should know about diesel

#28 of 35 A theory by andys120

Jun 10, 2008 (7:51 am)

A freind who owns a convenience store tells me that his suppliers think Diesel is soaring partly because the Chinese have converted coal-powered factories and power-plants in Northeastern China to burn Diesel in an attempt to clean up the notoriously polluted air in the Peijing area for the 2008 Olympics.
 
If they switch back to cheap and plentiful coal after August, Diesel prices should decline considerably.

#29 of 35 Re: A theory [andys120] by texases

Jun 10, 2008 (7:55 am)

Replying to: andys120 (Jun 10, 2008 7:51 am)
"A freind who owns a convenience store tells me that his suppliers think Diesel is soaring partly because the Chinese have converted coal-powered factories and power-plants in Northeastern China to burn Diesel "
 
Hope that's true, but all I've read about is them building new coal plants 1/week. The conversion to fuel oil (not usually diesel) is pretty expensive.

#30 of 35 Re: A theory [andys120] by british_rover

Jun 10, 2008 (11:06 am)

Replying to: andys120 (Jun 10, 2008 7:51 am)
Ehh that doesn't really make sense. They probably wouldn't convert to diesel they would convert to the cheaper bunker fuel oil which is cleaner then coal but dirtier then diesel.
 
The conversion to either diesel or bunker fuel would be very, very expensive.

#31 of 35 Re: Why Is Diesel Fuel So Expensive? [praetorrian] by chadx

Jun 19, 2008 (8:17 am)

Replying to: praetorrian (Jan 28, 2008 1:02 pm)
Hmmm. Your post would have made better points without the exaggerations and/or "conspiracy" mood. I can't resist but ask a few questions and make a few comments.
 
"The truth of the matter is in reading between the lines. Diesel is not expensive in reality due to supply and demand, but that is what the mass media and experts would have you believe to be true. "
 
Even if you are saying that the oil companies are limiting production and that is what is causing the high prices, that is, in fact, supply and demand. Low supply increases demand on what is available and so impacts prices. So how are current diesel prices not a supply and demand issue?
 
"Think I'm full of it, start doing your own research, please..!!! The oil CARTELS and yes that is what they are..."
 
I guess the same can be said for Harley-Davidson, then, since they created high prices and high demand, for years, by limiting production. But, for some reason, people praised their business model.
 
"...reserves(and I'm not counting the military reserves, which are good for approx 100 years or so) but the public reserves."
 
I'd be interested in where that number came from. Our military has 100 year supply of gasoline/diesel? That is not possible. First, neither age well. Second, do you know how many gallons the military uses PER DAY? Perhaps you were saying stored crude oil, but again, not possible to store that much. Plus, it would have to be refined and that isn't something that can be done on the fly.
 
"They have the oil, already refined to light sweet crude stored outside the USA and they bring it in as they need to control the pricing."
 
Light, sweet crude is crude oil. It is not refined. Light crude means the American Petroleum Institute (API) gravity test of more than 31.1 degrees. Sweet crude is low sulfer rate (0.5% sulfter). Light, sweet crude is the easiest crude to refine but crude is not "refined" to be light and sweet.
 
"CA having some of the highest pollution rates, has the higer prices for diesel fuel as they must refine it more than other places. That is politics my man ! "
 
While I agree it would be easier to have one standard for diesel throughout the country, there are good reasons for the different grades. It's not just politics. Especially when it comes to low sulfer for reduced pollution. It's healthier for everyone. Not unlike when lead was removed from gasoline.
 
"Don't be one of the sheep! BE A WOLF ! "
 
I think you might have the symbols a bit mixed up. While I'll not be a sheep, I disagree with being a wolf. Be a sheepdog. A sheepdog keeps away the wolves (thieves, criminals, and those that prey on other people/sheep).
 
You may want to read the following:
http://godgunsglory.com/2007/07/04/are-you-a-sheepdog/

#32 of 35 Re: Why Is Diesel Fuel So Expensive? [chadx] by gagrice

Jun 19, 2008 (8:37 am)

Replying to: chadx (Jun 19, 2008 8:17 am)
High diesel prices is purely a supply issue. If I remember correctly. After Katrina tore up a couple refineries, two refineries were converted from diesel to gas. We also have been in the transition from 500 PPM sulfur diesel to ULSD. Not all refineries are producing ULSD at this point. Being a mixed bag of distillates does create supply problems in the winter when the demand for heating oil is high. As of today gas prices are catching diesel prices here in CA. It is later than usual.

#33 of 35 Re: Low Sulphur Diesel [gagrice] by chadx

Jun 19, 2008 (1:02 pm)

Replying to: gagrice (Mar 21, 2008 6:02 pm)
" I cannot believe the working class in China and India can afford those prices. "
 
What prices? China has a cap on gas prices so the prices are currently artificially low (lower than the cost of production) and the refineries are lossing major money. That is even with the government allowing a recent price hike. I'm not sure about prices in india, but I don't think they are having the "must own a car" panic that Chinese public is going through currently.

#34 of 35 Re: Low Sulphur Diesel [chadx] by british_rover

Jun 19, 2008 (1:53 pm)

Replying to: chadx (Jun 19, 2008 1:02 pm)
India has raised their prices as has many other Asian countries but none of them have the power of China to effect oil prices. If China lets the price of fuel float up even just a few percent so that it is still well below the market average but more expensive then the people are used to it will have a large effect on demand.
 
China is the 800 lbs Panda, sorry couldn't resist, in the room.

#35 of 35 Re: Low Sulphur Diesel [british_rover] by chadx

Jun 20, 2008 (6:45 am)

Replying to: british_rover (Jun 19, 2008 1:53 pm)
"If China lets the price of fuel float up even just a few percent so that it is still well below the market average but more expensive then the people are used to it will have a large effect on demand. "
 
I guess time will tell on that, but a "few percent" probably won't make much of a difference. Few folks in the US changed their habits until the price doubled. That's 100% increase, not just a few percent. I would expect the Chinese to react the same. There is such a mindset there that everyone has to have a car to show their success. I would expect it to take a pretty big hike in price to change behavior. For better or worse, that 800lb Panda has discovered it like it's cars as much as us.

Messages Page 4 of 4

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