Why is the cost of diesel fuel so high, comparatively, still?

[Keywestparrothead]

Hello all, I had searched for the topic and found a couple gas vs. diesel threads, but none that spoke to the “why” of the high cost of diesel. I am on my second diesel truck and when I bought my first in 2007 diesel costs per gallon was close to Regular unleaded. Shortly after and until now it is above Premium unleaded costs.

After several searches on the all and mighty Google early on, the primary reason for the high costs were due to the lack of production facilities as the refineries impacted by Katrina were down and the remaining refineries shifted production to meet the gap for gas. Fair enough, supply vs. demand, I get it. But fast forward a couple years, all refineries back online and “back to normal” diesel is still through the roof.

So it must be that it is so expensive and difficult to refine diesel, right? Wrong… I started searching again and spoke to some folks in the business and those that know people in the business and they tell me this. In the refining process diesel is the first “turn off” in the process. Meaning it is refined the least! It goes down the line from diesel, reg unleaded, med unleaded, prem unleaded, jet fuel, etc. Each step taking more process and time to refine and produce.

While I am fortunate to not have to worry too much about the costs for our favorite pastime, RV’ing, I always feel like someone is pulling the wool over our eyes, especially when gas is close to free these days!! LOL. And that is coming from someone who owns several energy (oil, gas, transportation) stocks.

Is it going to keep me from driving my truck? No, I figure the breaking point for me is $10 a gal and then I buy a horse! I’m just looking for others thoughts, opinions and insight into this and I’m not trying to start any gas vs. diesel wars

Here is one source, which tries to explain it.
http://www.eia.gov/Energyexplained/i...fecting_prices

[BirchyBoy]

Here's a good discussion. It's all about how much is made and the cost of regulations.

http://www.reddit.com/r/explainlikei...s_diesel_more/

[Festus2]

Why is the cost of diesel still higher than gas?

Put any kind of spin on it you like, its all about $$$$ and profit.

[GMcKenzie]

Another take on the pricing.

https://ask.theglobeandmail.com/why-...like-gasoline/

This is more on the winter price of diesel being not having dropped as much as gas.

I usually find diesel is cheaper in the summer and more in the winter up here.

[wahoonc]

Diesel is an inelastic commodity, the demand for it is fairly consistent and doesn't vary much. Also they get less diesel out of a barrel of oil than other distillates. In addition #2 fuel oil for heating and diesel are basically the same thing, it is still winter in much of the country.

Aaron

[2014301ktmhauler]

Bingo goes to Aaron

[DirtyOil]

Also they get less diesel out of a barrel of oil than other distillates.

Will have to correct that statement...

out of a 42 US gallon barrel of crude oil:

45-47% is gasoline
10-24% is heating oil/diesel
8-10% is Jet fuel/kerosene
less then 1% is aviation gas
less then .05% is Naphthas

of course these percentages can vary depending on the feed stock... Brent sea oil, which is very light oil and priced higher then WTI - (West Texas Intermediate) which a slightly heavier oil. Then there's Big Boy Oil from Canada, heavier specific gravity and a little more sulphur then the previous two stocks but cheaper in price. So, the main stocks are #1 Gasoline and #2 Heating oil/diesel. As the refinery continues to "refine" that barrel of oil the volume of refined products becomes less and less.

Price is based mostly on "supply and demand".

[wahoonc]

Originally Posted by DirtyOil

Will have to correct that statement...

out of a 42 US gallon barrel of crude oil:

45-47% is gasoline
10-24% is heating oil/diesel
8-10% is Jet fuel/kerosene
less then 1% is aviation gas
less then .05% is Naphthas

of course these percentages can vary depending on the feed stock... Brent sea oil, which is very light oil and priced higher then WTI - (West Texas Intermediate) which a slightly heavier oil. Then there's Big Boy Oil from Canada, heavier specific gravity and a little more sulphur then the previous two stocks but cheaper in price. So, the main stocks are #1 Gasoline and #2 Heating oil/diesel. As the refinery continues to "refine" that barrel of oil the volume of refined products becomes less and less.

Your numbers support what I stated...

Aaron

[DirtyOil]

Sorry but I read your statement as : less diesel then other distillates

[BirchyBoy]

I worked for an oil pipeline for a number of years that pumped oil from Maine to Montreal, Quebec. The refining process is very cool, if your into that thing.

[pmedic433]

Also EPA regs in 2002, and even stricter in 2007, called for ultra low sulfur diesel fuel. So even if diesel is the first turn off in the refining process, it has to be refined even further to meet EPA regs. Hence since 2002 fuel has remained high, engines have to have egr systems, after treatment exhaust systems( def fluid)resulting in less reliable, and more expensive vehicle and operating costs. The same can be said for ethanol gas. Higher operating cost due to ethanol not having the same BTUs as regular gas. Resulting in less milage. Not to mention the highly corrosive properties of ethanol destroying fuel systems.

[Keywestparrothead]

All great information and good points. Keep 'em coming

[Ken / Claudia]

Here diesel is up and down in price from one station to another but, gas is about same. Last week unleaded reg gas was around 2.10 to 2.15 everywhere. I got Diesel for 2.09 and 1/2 mile away a station was 3.29. Drove about 60 miles and again found Diesel for 2.10 to 2.70 at stations where reg gas was 2.10 to 2.25.

[byrdr1]

Diesel is 2.719 around the cheapest we have, but I have seen it at 3.109 this week too.
Gas is running 1.989 but it was 1.859 last week.
I always fill up at half tank mark. what cost me 85.00 a few months ago was only 50.00 this week. That opens me for few nights extra to camp or a nice meal out finally.
Very Budget friendly....
Enjoy and camp more....
randy

[chuckster57]

Diesel fuel is mandatory for the movement of goods, gasoline isn't.

If your an oil company that wants a steady income not subject to the whims of driving habits, watcha gonna do?

[Desert185]

$2.49-$3.30 for diesel in TX. $2.71-$3.49 here in Palm Springs area (taxes). The booze in Kalifornia is cheaper, though (taxes).

We've saved at least $35-$40/day in daily travel fuel costs during this trip compared to what fuel prices were a year ago.

[gearhead]

After working 35 years in a very large refinery/petrochemical complex in Houston I will say it is a very complicated issue. Not every refinery is configured the same. Some might make more diesel than others. It depends on the capacities of each unit within the plant. Refining is not a "once through" type process. Each unit has several products that are sent to other units. There are many streams that sent to different units to achieve the product mix. And...that changes somewhat due to the season and changing market demands. The plant I worked at was oriented toward making as much diesel as possible. there is a big export demand for diesel. I'll just say that making gasoline, diesel, and petrochemicals is an incredibly difficult, highly technical, expensive, and sometimes scary process.
Here is a blog that I follow that describes the difference in price drop of gasoline vs. diesel against the price drop of crude:
https://rbnenergy.com/baby-can-i-dri...crash-windfall
I would recommend that all that are interested in the oil/nat gas/ NGL, etc. markets dig through these daily blogs. The economics involved in these products are deeply complicated.

[Desert185]

Thanks. That blog computes with reality.

[pawpaw]

When Rudolph Diesel invented the "diesel" engine it was designed to run on peanut or vegetable oil. A certain Mr. Rockefeller coaxed him into using diesel fuel which was named in his honor. Would we be better off using peanut oil again?

[GMcKenzie]

Originally Posted by pawpaw

When Rudolph Diesel invented the "diesel" engine it was designed to run on peanut or vegetable oil. A certain Mr. Rockefeller coaxed him into using diesel fuel which was named in his honor. Would we be better off using peanut oil again?

Outside of small, backyard setups using used oil (french fry or whatever), the energy required to grow the plants you could use for fuel is more than the energy required to get this stuff out of the ground and refined. The economics don't really make sense yet. Especially with current prices.