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Questions on Diesel vs Gasoline Prices

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Alberta Mike

01-12-2005 17:03:14




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Got a couple of questions here about diesel and gas prices.

1. I remember when diesel prices were far lower, maybe 1/2, of gasoline prices. What has happened in the market that they are pretty much the same or even higher for diesel?

2. Out of a barrel of oil, how much gasoline (all grades) vs diesel are produced?




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dej(JED)

01-13-2005 10:34:52




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
Crudes vary a lot in composition and it is hard to quantify exact amounts. It depends on the crude being used as a feedstock.



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kyhayman

01-13-2005 07:33:03




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
The listings of the breakdowns look like what I am familiar with seeing. My family has been in the oil and gas business for many many years. Since the mid 90's most of the wells are capped. Most of the Kentucky wells are simply not economical to extract at less than $35 a barrel. While oil has been higher than that of late, natural gas shot up in the $9/MCUFT a couple of years ago, lots of small companies sunk lots of big $$ in bringing gas fields on line. Now gas is down in the $5's and these fields have higher fixed cost than that. Put a lot of the independents out.

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john in la

01-13-2005 07:11:59




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
What a Barrel of Crude Oil Makes (42 Gallons)
Product Gallons per Barrel
Gasoline 19.5
Distillate Fuel Oil (includes both home heating oil & diesel) 9.2
Kerosene-type Jet Fuel 4.1
Residual Fuel Oil (heavy oils used as fuels in industry, marine transport and electric power generation) 2.3
Liquefied Refinery Gases 1.9
Still Gas 1.9
Coke 1.8
Asphalt and Road Oil 1.3
Petrochemical Feedstock 1.2
Lubricants 0.5
Kerosene 0.2
Other 0.3

You would need to write a book to fully explain how the price of fuel is figured at the pump but it all boils down to supply and demand.
While the price of oil drives the price of fuel it only does it in the long run. Gas and Diesel are both sold on the stock market and the supply for that day really sets the price. While the consumer sees prices change every now and then the wholesale price changes every day. Sometimes twice a day. It may go up .05 today down .07 tomorrow and back up .03 the next day while the price at the pump stays the same.

Some things you need to consider when comparing gas and diesel prices…..
Mark up on diesel is greater due to supply. There is not 3 diesel stores on every corner to supply the competition needed to keep prices down.
Oil refineries due there major shutdowns for repairs in the winter months for the most part when diesel is in a greater demand.
The cheep price of diesel caused the consumer to switch to diesel driving up demand which drove up the price.

Some other things to consider.
Companies are in business to make money. They could care less if fuel cost $5.00 a gallon. In fact they would sell it at $5.00 per gallon today if they could get the guy across the street to raise his price to $5.01
While you and I buy fuel on a per cent basis the wholesale price is figured to the thousand of a cent. A thousand of a cent is big money to large companies because of the quantity they buy it in.

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buickanddeere

01-13-2005 07:30:15




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 Re: Questions on Diesel vs Gasoline Prices in reply to john in la, 01-13-2005 07:11:59  
Crude oil varies by region. Anything from mostly kerosene to mostly Bunker Oil. After primary distillation the reformers and crackers are used to convert the lighter stocks to gasoline for summer demand. It"s expensive to make but 116 octane unleaded can be produced if desired. Around here diesel is now 14 cents US more per US gallon that 87 at the automoive pumps. Wonder how all these people save money with their diesel pickups doing 10,000 miles per year.

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JT

01-13-2005 15:29:29




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 Re: Questions on Diesel vs Gasoline Prices in reply to buickanddeere, 01-13-2005 07:30:15  
Buickanddeere,
This is my reasoning for all the money I save with my Ford PS? I used to have a Ford F150 with a 302 that got 10 mpg, my Diesel gets 15-17 mph, so diesel would have to get to $3.00 plus per gallon for it to be more expensive to drive my diesel over gas. Is that a good way to look at it? :>o
Jim



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buickanddeere

01-13-2005 18:05:19




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 Re: Questions on Diesel vs Gasoline Prices in reply to JT, 01-13-2005 15:29:29  
How many miles do you have to drive at 15mpg vs 10 mpg with the more expensive fuel to break even on the price and interest on the diesel option? $1750.00 for $1.75 gasoline per year at 10,000 miles per year. $1233.00 per year for $1.85 diesel a year. Lets see $516.00 savings a year minus the big bucks for the fuel filter. Your $10,000 diesel option (plus taxes) will take no less than 19 years to break even. I didn't even incluide the cost of the fuel filters, extra interest on the $10,000 diesel option and the extra federal and/or state sales tax on the $10,000 option. Rare indeed is the diesel driver who does 50,000+ miles per year to just break even. I ran those numbers to the fellow in the coffee shop at work infront of a crowd after tiring of hearing the wonders of his new diesel. He's been rather frosty ever since.

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Robert in W. Mi.

01-14-2005 06:55:06




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 Re: Questions on Diesel vs Gasoline Prices in reply to buickanddeere, 01-13-2005 18:05:19  
First off, i've NEVER paid 10K extra for the diesel option!!! (less than 5K on the last one) Second, the gas filter on my car cost 20 bucks, same as the one on my diesel pu.. Third, no i don't always drive a lot of miles per year, so i just keep them longer!! That means more time for the diesel pay back! Lastly, the diesel pu not only sells a LOT "easier" used than a gas pu, it's worth a lot more at the time of the sale too....

Why don't you figure all of that into your penciling...

Robert

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buickanddeere

01-14-2005 17:41:25




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 Re: Questions on Diesel vs Gasoline Prices in reply to Robert in W. Mi., 01-14-2005 06:55:06  
Sorry I don't want to offend, but rare is the diesel pickup sold that saves the owner money in the long run. A salesman with heavy samples,business service truck, tractor jockey or livestock drover with a trailer.The high mile owners with heavy loads are the only winners. A GMC pickup here with the diesel and required HD auto trans is 10,000 grand extra plus sales tax here. The trade value won't matter because the truck will be 15 years old and rusted through when the diesel breaks even on cost.When you calculate in the extra interest on the purchase price. Are you going to drive the truck another 10 years to get ahead on fuel savings? A 15-25 year old truck will cost more to repair than what its worth.

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Robert in W. Mi.

01-15-2005 17:39:22




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 Re: Questions on Diesel vs Gasoline Prices in reply to buickanddeere, 01-14-2005 17:41:25  
Yes, i keep them a long time, and the only two we sold because they were costing too much to keep around were Ford PS's.. Now, those are expensive puppys to have around.

Do you walk in and pay full price for the diesel package????? ????? Didn't anyone tell you you can get the diesel package discounted just like any other package????? ?? I've NEVER paid full price for the diesel package yet.

I have 3 diesels right now, and as far as i'm concerned, they have paid me back!!!! Apparently i'm not like you, i don't have to have a new pu every few years and then try to figure out why a diesel doesn't pay... BUT, each to there own.. :>))

Robert

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john in la

01-13-2005 07:46:25




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 Re: Questions on Diesel vs Gasoline Prices in reply to buickanddeere, 01-13-2005 07:30:15  
Yes they can change the unit around to adjust these figures as the supply is needed but it is not just turning a valve. The cracker has to be shut down so they only do it 2 times a year. Once in spring to beef up gas production and then in the fall to beef up diesel production.

The thing that gets me is the price markup differance between gas and diesel by the stores. Granted it cost a lot more to have a large truck stop that sells diesel (parking area; showers; tv room; ect ect) but that is little comfort to me when I go and buy 10 gals of diesel for my tractor.

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JT

01-13-2005 06:40:24




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
Yes, i agree, something is not right. Used to be back 50 years ago, distallites were a by product of the production of gasoline, so you were almost paid to take it. From what my dad told me, that is why the tractors were started on gas and then run on distillates, the prices were very, very low compared to gasoline, so much cheaper to run that way. So personally, I think that becasue of all the diesel trucks on the road, it is a way for oil companies to rip off consumers. Unitl the demand for diesel went up, it was still .30-.40 cheaper than gasoline. The low/no sulfer diesel fuel things were instituted long after the price of diesel took a big hike in price.

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Davis In SC

01-12-2005 20:00:35




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
I keep hearing that it is cheaper to buy Mid-East Oil than to pump it from wells here... Seems that it would be worth using our oil now, it might lower the cost of the Mid-East oil, if we slowed down importing it. Or perhaps we are just saving our oil for a crisis.....



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thejdman01

01-12-2005 19:39:00




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
Part of the reason diesel prices have gone up is the more refinining due to emissions more sulfer must be taken out. In winter diesel goes up because winter fuel is a mix of 1 and 2. Part of the reason of both gas and diesel prices supposidly is the "shortage" of crude oil yet they cut production and raise it so how can theire be a shortage but i do know that is oil were getting out of saudi arabia has more parifins (trash) in it and is a lower grade crude oil then previously getting and getting out of the US. ONe thing i never understand is barrel prices go up 2 cents and price at the pump goes up 6 barrel prices go down 2 dollars and prices at the pump stay the same or go down only a cent. another thing that really really mistifies me how stations that dont get deliveries everday can fluctuatate 5 cents in one day honest. that doesnt make sense to me if they paid x amout per gallon when the tanker came and they got their overhead how can the price fluctuate until they get their next shipment. highway robbery. they know they got us over a barrel just like how can gas always go up on thursday and down on tuesday? one thing that also amazes me is gas prices tend to have a direct influence to the pump yet the barrel prices and the barrel will take 3+ months to get to the pump by the time it gets shipped refined. also in by chicago in marengo and mchenry county prces are cheaper right now then in rockford how can that be? first off it gets trucked from rockford to marengo so they got more transport charges and marengo has extra taxes for the trains metra. so how can they be cheaper. waht woudl amaze you is the fact that i know somone who works for union pacific railroad and no joke when they buy fuel and the quanitties they buy it in are paying right around 90 cents per gallon. anyways im off my soap box

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Alberta Mike

01-13-2005 06:59:26




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 Re: Questions on Diesel vs Gasoline Prices in reply to thejdman01, 01-12-2005 19:39:00  
Service stations are just part of the whole "inventory" within the gasoline market when it comes to pricing. When a price goes up or down, before the change at the pumps, computer or gauge readings are taken at the station to determine how much gas is left (or has been sold) at the previous price. For example, if an operator had 2672 gallons left at yesterdays price and the oil company decided that a price change (up or down) was going to happen, then the "refinancing" of the remaining inventory would be done by the computer system. In other words, what the operator is paying for the gas remaining in his storage tanks can actually change up or down even though it is already in there. You are saying that 2672 gallons of fuel should be sold off first at the old price (which probably makes sense) but it doesn't work that way, even when prices drop. If there is a price increase, the operator owes more for what's left and if the price drops, he pays less.

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john in la

01-13-2005 07:18:34




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-13-2005 06:59:26  
That is only true for a VERY small select group of stations. Very few pay for the product as it passes through the pump. Usually limmited to the privet owned major brand stores.
Off brand or no brand stores pay for the product when it is loaded in the truck.



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Alberta Mike

01-13-2005 12:58:47




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 Re: Questions on Diesel vs Gasoline Prices in reply to john in la, 01-13-2005 07:18:34  
Could you give some specific examples of the two groups or categories that you mention in your post?



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john in la

01-13-2005 18:08:54




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-13-2005 12:58:47  
First there are those that do not own the store. Lets say it is a Exxon station. Exxon owns the land; tanks; pumps; building; ever thing. The owner only rents the place. Exxon puts its fuel in the tank and the owner pays for it as it is pumped per gross gallon.

Then there is the guy that owns every thing but the tanks. He contracts with a local supplier that puts his tanks in the ground. The fuel is paid for as it is pumped. That way if the tank gets a leak it is the tank owners problem and not the small town mom and pop that own the store. They buy in gross gallons.

Then there is the small local store owner that owns every thing including the tanks. He buys his fuel from a local jobber or bulk plant owner. He pays for his fuel when it is put into the ground. He buys in gross gallons.

Then there is the big user. (owns several stores; is a jobber; ect) He deals in several truck loads a day and has a account set up with the supplier to have his stuff loaded at a loading rack. He pays for the fuel the second the driver pulls his loading card from the rack computer. It is automatically deducted from his bank account. He buys in net gallons.

Then there is the supplier. This is usually the refiner but can be some one that buys fuel on the stock market in very large blocks.
They do not have to have a loading rack in every town because they work on a exchange basis. Say you and I were suppliers. I have a loading rack in my town and you have one in your town. I would let people buy from you and load here if you would do the same for me. At the end of the month it works out that we are about even and owe each other nothing.

Like I said you can write a book on the subject. This is NOT every possibility but shows you how some work.

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MarkB_MI

01-13-2005 03:21:49




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 Re: Questions on Diesel vs Gasoline Prices in reply to thejdman01, 01-12-2005 19:39:00  
JD,

I'm no expert, but I do know that "sweet" crude from Saudi Arabia and the rest of the Gulf is a better grade of crude than is generally available from domestic wells. Sweet crude has less sulfur, so it's easier to refine. The percentage of paraffins in a particular crude is not particularly important because the refinery is going to "crack" it anyway to get whatever they need: gasoline, kerosene, diesel, etc.

As far as fluctuating fuel prices, this is mostly supply and demand. Gas stations know that most people fill up for the weekend and bump up their prices accordingly.

Believe me, if you bought your fuel in the quantities that UP does, you'd be getting the same deal they do.

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Glen2

01-12-2005 19:38:08




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
Different grades of crude oil has different yeilds of product. Crude is taken to the crude units where about 40% is gasoline 7% napatha, 12% kerosene, 12% Distilate,10% gasoil or cracker charge,and about 18-20% bottoms or topped crude, this is taken to the Vacumn unit where more cracker chg is pulled off, the bottom from the vac. unit goes to the cokeing unit where more cracker chg is pulled off. This is cracked where more gasoline is made along with a diesel blend that is blended with the distilate and kero. The gasoline off the crude unit is taken to the reforming unit where it is upgraded to a higher octane. This all based on Oklahoma sweet crude of which there is very little to refine these days.

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Sid

01-12-2005 19:21:38




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
I did some looking around but didn"t find anything to answer your question. But thought this was interesting. In breaking down the cast of gasoline and diesel it is something like this. About 50% of the cost is crude. Refinery cost 11-15%. Distribution and marketing account for about 13-15% of cost. While takes are about 21-23%. When I was hauling out of a Conoco terminal about ten months ago they had posted on the bulletin board in the drivers room a break down of the products that came from a barrell of crude. I do not remember the breakdown but found it interesting that they get more gallons of product from a barrel than is actually in a barrel to begin with. One of the guys that was righ when I aked if it wasn"t a missprint.

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jimont

01-12-2005 18:17:14




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
Mike - I live next to a refinery here in Ont. and have worked shut-downs there since helping build it in the '70's. This time of year, gasoline is considered almost an after-thought as the big demand is for heating oil, while the reverse is true though the summer when there is a greater demend for gasoline. So, hopefully the price of diesel will drop in the spring. At least that's the reasoning I used for not refilling my farm diesel tanks after harvest this fall ----- hope I'm right.

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buickanddeere

01-13-2005 11:47:59




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 Re: Questions on Diesel vs Gasoline Prices in reply to jimont, 01-12-2005 18:17:14  
At Sarnia or Mississauga. I was at the PetroCanada on Southdown Road for a year doing outage and maintance. Interesting place, extra hot in summer and bitter cold in winter.



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jimont

01-13-2005 13:45:28




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 Re: Questions on Diesel vs Gasoline Prices in reply to buickanddeere, 01-13-2005 11:47:59  
buickanddeere - Actually it was at Esso (Texaco)at Nanticoke. Went there from Nanticoke G.S. then to Stelco (Lake Erie Works). You're right, there's no colder place in the winter, especially in those tank farms.



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John M

01-12-2005 17:44:03




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 Re: Questions on Diesel vs Gasoline Prices in reply to Alberta Mike, 01-12-2005 17:03:14  
Dont know #2,but around here,diesel gets alot lower than gas during the summer and shoots way up early in the winter then eases back down.By ALOT I mean like 40 or 50 cents US.I pay 190 for diesel,my wife pays 185 for gas,if the trend holds Ill be paying about 160 shell be paying about the 180-190.



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steveormary

01-13-2005 00:15:02




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 Re: Questions on Diesel vs Gasoline Prices in reply to John M, 01-12-2005 17:44:03  
It seemed when i needed deisel or gasoline that is when the price was highest. Ain that the way it works;buy high and sell sheep.

steveormary



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Stickler

01-13-2005 06:36:27




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 Re: Questions on Diesel vs Gasoline Prices in reply to steveormary, 01-13-2005 00:15:02  
I should buy when I'm high and then sell the sheep? I try not to get anywhere near anywhere I can spend money if I'm high, and who'd buy sheep this time of year?



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