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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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#1 of 35 Why Is Diesel Fuel So Expensive? by hpmctorque

Jan 03, 2008 (11:35 pm)

In some states and localities, diesel fuel costs more than premium gasoline. Why? I thought less refining is required to produce diesel fuel than gasoline. In Europe diesel costs less than gasoline, so maybe it's a political and tax issue.
 
Also, will increased demand for diesel fuel, resulting from increased sales of diesel vehicles in the future, have the unintended effect of increasing the price of heating oil, similar to how greater ethanol production drove up the price of corn?

#2 of 35 Re: Why Is Diesel Fuel So Expensive? [hpmctorque] by jlawrence01

Jan 03, 2008 (11:53 pm)

Replying to: hpmctorque (Jan 03, 2008 11:35 pm)
It goes in cycles. At times over the past three years, diesel has been considerably LESS than unleaded gasoline.
 
I am NOT a petroleum expert. However, from what I have read, the price of diesel is affected by strong demand for heating oil which is the fuel of choice for heating homes in the New England and Midatlantic regions.

#3 of 35 Re: Why Is Diesel Fuel So Expensive? [jlawrence01] by texases

Jan 07, 2008 (9:20 pm)

Replying to: jlawrence01 (Jan 03, 2008 11:53 pm)
Yes, supply and demand. I imagine the new low-sulfur requirements has tightened supplies.
 
Also, there's more BTUs in diesel, so on an energy-content basis, it should cost more.

#4 of 35 Re: Why Is Diesel Fuel So Expensive? [jlawrence01] by andys120

Jan 08, 2008 (3:08 pm)

Replying to: jlawrence01 (Jan 03, 2008 11:53 pm)
However, from what I have read, the price of diesel is affected by strong demand for heating oil which is the fuel of choice for heating homes in the New England and Midatlantic regions.
 
This makes some sense, Inhave read that automotive diesel oil is similar to #2 heating oil. In New England the price of both shoots up in winter and declines in Spring. It is cheaper than 87 Octane in summer but in winter it's almost as much as 93 RON.

#5 of 35 Re: Why Is Diesel Fuel So Expensive? [hpmctorque] by tpe

Jan 08, 2008 (7:37 pm)

Replying to: hpmctorque (Jan 03, 2008 11:35 pm)
I'm no expert on this matter but I know that when refining a barrel of oil different products are distilled at different temperatures. Diesel fuels and other distallates are produced at the higher temperatures. There are 42 gallons in a barrel of oil. You cannot choose to produce either 42 gallons of unleaded gasoline or 42 gallons of diesel. I imagine it's adjustable to some extent but typically you're going to get twice as much gasoline as diesel, maybe a little more gasoline. The diesel fuel supply in this country is pretty well spoken for by the airline industry, the truckers and the demand for heating oil. So an increase in diesel vehicles would in all likelihood drive up the price of diesel.
 
European countries, with their diesel fleets, have a surplus of unleaded gasoline. They export this surplus to places like the US and Japan. If the US stopped importing their gasoline I'm sure it would change the dynamics of how they priced fuel in Europe.

#6 of 35 Re: Why Is Diesel Fuel So Expensive? [tpe] by texases

Jan 10, 2008 (3:21 pm)

Replying to: tpe (Jan 08, 2008 7:37 pm)
European countries, with their diesel fleets, have a surplus of unleaded gasoline. They export this surplus to places like the US and Japan. If the US stopped importing their gasoline I'm sure it would change the dynamics of how they priced fuel in Europe.
 
That's right. I asked my brother, a refinery engineer now working on marketing for a major refiner, about the gas/diesel balance, and here's what he said:
 
The current U.S. refining industry has only limited capability to generate more diesel versus gasoline in the short term. In fact, I personally believe the diesel market in the U.S. will Not take off like it did in Europe for three reasons:
 1) Europe's rapid dieselization was heavily subsidized by preferential tax policies vs. gasoline. This type of aggressive social engineering is not as likely to occur in the U.S.
 2) Diesel engines are significantly more expensive to produce than comparible gasoline engines and do not have a broad history of usage in passenger vehicles in the U.S. like in Europe.
 3) Most importantly, the Europe's dieselization was essentially "costless" in terms of refining capital expenditures, as European refiners simply cranked up their excess refining capacity to make more diesel and gasoline, selling the excess gasoline to the U.S. In fact, the U.S. imports roughly 1 Million Barrels of gasoline and gasoline components from Europe every day!
  
In other words, Europe's dieselization was done on the back of the U.S.'s continued consumption of (relatively cheap) gasoline. If the U.S. were to "dieselize" in any significant manner, it would require 10's of Billions of Dollars in refining capital expenditures for process units such as Hydrocrackers to shift the product mix from 2/3 gasoline ~ 1/3 diesel to half & half gasoline and diesel.

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

Jan 28, 2008 (1:02 pm)

Replying to: hpmctorque (Jan 03, 2008 11:35 pm)
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.
 
You remember when oil first soared out of site after Katrina??!! That taught the oil refineries something very important for them. Not that Supply and Demand is important, but that they can actually manipulate supply and demand to regulate the pricing. Think I'm full of it, start doing your own research, please..!!! The oil CARTELS and yes that is what they are, now know that they don't need to keep the large reserves in this country up to full capacities (and I'm not counting the military reserves, which are good for approx 100 years or so) but the public reserves. 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. If they keep the supplies low, they can keep the price high. So in effect yes, it is supply and demand, but it isn't just natural S&D, rather a regulated version of it. The other side of the coin is the EPA standards. I'll bet you did not know there is approx 70 different grades of diesel fuel out there and I'm not talking about type 1 or type 2 winter vs. non winter mix either. There is different sulphur amounts per grade of diesel fuel depending on where you live in the USA and what the local EPA branch determines is fit for that area. 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 !
 
The is ALOT MORE going on then simple S&D formulas to high diesel prices. Start reading things like MOTHER JONES magazine (the alternative media sources) and go to other countries websites and see what they saying about the USA (get the translated copies of course) and you'll be shocked and also you'll get the full story, not what the USA media wants you to hear....
 
Good Luck !
Don't be one of the sheep! BE A WOLF !

#8 of 35 Re: Why Is Diesel Fuel So Expensive? [texases] by johndix60

Jan 29, 2008 (7:26 am)

Replying to: texases (Jan 10, 2008 3:21 pm)
Now, now: the price of a Mercedes E Class diesel is $1000 US more than the V-6 gasoline 350 engine. Guess its what you define as "significant"

#9 of 35 Re: Why Is Diesel Fuel So Expensive? [johndix60] by texases

Jan 29, 2008 (7:32 am)

Replying to: johndix60 (Jan 29, 2008 7:26 am)
the price of a Mercedes E Class diesel is $1000 US more than the V-6 gasoline 350 engine
 
True, but MB's an anomaly. The VW TDIs were typically $1500 more, a much bigger % increase. I've always wondered how MB does it so cheap - is there a difference in equipment levels? And the basic point is that we can't quickly switch to a higher diesel % usage without expecting the already high diesel fuel price to increase. It starts taking a lot of miles to pay off that $1000-$1500 when diesel's more expensive than gas.

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

Jan 29, 2008 (7:51 am)

Replying to: texases (Jan 29, 2008 7:32 am)
There is one silver lining in owning a diesel. When Katrina hit many stations ran out of regular gas. They still had diesel. Plus the much longer time between refueling is a plus. When I bought my Passat TDI in 2005 it was only a $200 premium. When I sold it with 8000 miles and made $3000 over what I paid new, it proved I was right about buying diesel vehicles. There is this window of opportunity that we are in currently with buying and selling diesel cars. You can buy one new in most states and drive it for 7500+ miles and list it for sale in CA and get your money back with interest. There are several people doing that on Craigslist. The VW TDIs are the preferred. I think selling used MB diesels may be less lucrative.

Messages Page 1 of 4

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