Gas vs Diesel

sourgum

Member
Gas here has gone down about every week or two since July finally settling @ 2.14 gal now. Can't figure diesel out. It is about 3.51 now and does not move in parallel to gas. It just stays expensive no matter what. Is that because demand for diesel fuel for big trucks, pick ups, airlines etc is exceptionally strong all the time or what.
 
Good question... I asked it of my fuel supplier last week. He muttered something about some pipeline disruption.

Over the road was $3.74 last week here in WI. I was offered off road for $2.63 for spring on Friday. Maybe there is hope.
 
I filled the tanks on my truck week before last for $3.15, but the average around here seems to be closer to $3.30.

I see all kinds of reasons given,for pricing on diesel. For all of those reason, the one thing that always comes to mind, to me, is that if you think back to when prices went up dramatically, and stayed there, was directly following Katrina. As a result of that storm, refineries closed, fuel got contaminated, and so on, so prices went up. Funny thing, no matter how high it went, and remember it was well over $4.00 a gallon for awhile, folks were still buying it just like they always did.

So as far as why the cost on diesel is as high as it still is, and the prices move like they do, is simple......People, or more specifically businesses, need fuel, and will pay whatever they have to to get it, or go out of business as a result. Not to mention, we're supposed to be conditioned by now, to think that all it takes is one little hiccup in the supply chain, and they can change the price on a whim, even though there are still billions of gallons, in reserve, in the supply chain to get through the calamity, without anyone ever knowing it happened. BUT, if they tell us enough that the problem is going to cause a decreased supply, for the increased demand, then we will be more than willing to accept the price increase without fuss.
But that's just what I see happening.........
 
What I have heard is that there is a lot of demand for diesel in Europe and not as much for gas and that is why gas prices drop more readily.
Zach
 
You're lucky, here in E SD road fuel is $3.99 and farm fuel $3.10. Course our local customer owned Co-op just bought another $250,000 sprayer and we have to pay for it with the highest prices around. 25 miles away road fuel is $3.33.
 
You can't tell me that there is enough heating oil burned to make up for all the tractors in the summer. Its just an excuse!!!
 
The average state/federal diesel tax in October was a tad over 55¢ per gallon. Some localities add an additional 1% or more to diesel to have unsuspecting truck drivers help pay for their town's pet projects such as bike trails, swimming pools, custom graphic paint jobs for their water towers, etc.
 
Yes.

Aside from the reduction in the price of crude oil, there is a glut of refined gasoline due to reduced demand, etc.

There is no such glut of diesel fuel.

Supply and demand.

Dean
 
You can't have it both ways. Either there are legitimate market reasons for the price of diesel, or "it's just an excuse!"

If it's just an excuse why aren't they using the same excuse to keep gas prices high? Everybody was accustomed to paying nearly $4 a gallon for gas. They could have milked it for months, perhaps years.
 
Take a look at any major highway and all you will see are diesel trucks They are the major uses of diesel fuel and because they just pass the cost on to their customer they do not care about the high cost and therefore they do not complain to their govt. representative.
Most of the fuel that is used for heating was purchased months ago and the price is not as elastic because it takes months before the current fuel in storage is consumed. Lowering the price of diesel will not cause much of an increase in demand and raising the price will not cause a noticeable decrease in demand. The refineries are not going to be in any hurry to lower the price.
 
Public relations and inelastic diesel demand. Gas prices are highly visible to the general gas-consuming public so the oil companies think they can lower gas prices and thus garner some public good will. Gas is a loss leader. The oil companies' real profit comes from No. 2 (Diesel) fuel, demand for which as others have pointed out is nowhere near as elastic as for gas. Gas goes up, people can cut back some, but there is nowhere much to cut back in No. 2 (diesel) usage. You have to buy your No. 2 to heat your home, work the land, freight transportation etc, no matter what it costs whereas your teenage kid can always skip the trip to the mall if gas is too high.
 
Tankers from Europe-say Rotterdam refinery area- come to New Jersey filled with unleaded gasoline base that is a slight surplus in Europe and take back ultra low sulpher diesel base that is in greater demand in Europe for vehicles-about 30% of cars in Europe are diesel- and for the power plants that have been required to use the ultra low sulpher since middle 2000s. Result is a slight unbalance in supplies in US market compared to what would be expected with production figures from refineries. Other point is the road use diesel is the ultra low sulpher , extra pass through the still and filters, more expensive to make from some crude oil product- so will be a bit higher priced wholesale than the higher sulpher off road diesel allowed for some purpose in some locations yet- but being phased out for legal requirements for a low sulpher product in some high pollution areas for power plants and home heating oil, railroad diesel. The European demand/fuel swapping is seen at the pumps. RN.
 
The regulations that allowed you to play in the futures markets based on how much of the commodity you could produce, process, store, or sell, were intended to keep supply and demand in check. But once those regulations were lifted Anyone with a few extra bucks could play. Even with no intention of taking delivery or delivering a single drop.
The reason for the dropping prices right now is that the US is becoming too big a player in exporting petroleum products for OPEC's liking.
 
As it was explained to me, the issue stems from how the crude oil is refined. The refineries have the ability to vary the percentage of many of the products that they refine from each gallon, including gasoline. The percentage of Diesel is not variable and is essentially a byproduct of the refining process.

When demand for Diesel was low, so was the price. Now that demand is high and supply is essentially the same, the price goes up too.

How this helps.
 
First time in a long time fuel has been cheaper on the west coast than mid-west, I guess. Can buy on-road diesel up the road from here for $2.69.

Feels like I should load-up. If only I had an extra couple grand kickin around.....

Ben
 

Being that gasoline is a surplus product in Europe and diesel a surplus in North America . This still doesn't explain the extra cost of diesel in North America , the U.S. in particular . In Kincardine last night gasoline was a $0.99 and diesel $1.199
 
(quoted from post at 09:57:37 12/15/14)
How does Euopean diesel demand affect North American diesel demand? They are an ocean apart.

Umm the same way that crude prices in the middle east impact US crude prices. We export refined petroleum products. If Company X can get enough more for the diesel to make it worthwhile to export to Europe he will.
 

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