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Why are diesel prices so high??????

setterguy

Asked by setterguy,

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setterguy Veteran

setterguy

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When I bought my first diesel truck in 01, diesel was consistently 20-30 cents cheaper than regular unleaded. For the last 18 months or so they have been higher and are now 60-70 cents more than 87 octane. It is my understanding that diesel is a byproduct of making gasoline. If this is true than how can it be more expensive? I have been told that the war in Iraq is directly to blame as all our vehicles there are diesel. I guess this makes some sense, but I'm just wondering if anyone has some insight as to how the cost leapfrogged unleaded and why by so much.

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wolfwood Rookie

wolfwood

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diesel can only be a byproduct of making gasoline if their is more gasoline being made than diesel being comsumed dependent on the rate that diesel is a byproduct as in if you take 2 gal of oil and get a gallon of each diesel and gas then diesel would only be the byproduct if it was in less demand than gasoline maybe now gasoline is the byproduct I dont really know it thats the case or not

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MN Mike Mentor

MN Mike

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Maybe this link will help as far as where diesel comes from: Refining

I would have to agree with gunflint, heating season is on the way.

The other day I was out and about running down the highway, seen team Dodge out there with a diesel Caravan, big green sticker on the fuel door that said diesel only.

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iffwalleyes Grand Master

iffwalleyes

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I asked that the other day that the local Cenex they said that it was due to the demand for heat. That is a load of B.S. if you ask me. I love my diesel but it is crazy that diesel is that much more than regular.

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walleye_dog Contributor

walleye_dog

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I don't buy the heating season talk. I think the oil companies are just seeing how much of a profit they can make off of the trucking industry. It all just comes out of the consumers pocket anyway. My family owns a small trucking outfit, right now the fuel surcharge for 100 miles is around $35. The last time diesel was actually cheaper than unleaded was Nov. of 2004. It wasn't bad last winter staying about 20 cents higher on the average. All this summer it averaged around 35-40 cents higher. Boy-that sure was a wicked HEATING season we had this summer in July and Aug. The way it sounds, the teamsters are starting to grumble now. Don't know if thats gonna help anything, but I do know the F-350 powerstroke has been pretty lonley lately. Thank the heavens for $1000 dollar work beaters.

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Moose-Hunter Mentor

Moose-Hunter

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I've heard from "reliable" sources the higher diesel cost is directly due to the amount the USA exports overseas. Across the REAL big pond, diesel prices, I'm told, are close to $5.00 to $6.00 US per gallon. Basically it's all about who is going to pay more for the dino juice. Us or them? Getting pretty close right now!! mad.gif

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CodyDawg Mentor

CodyDawg

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I have heard that Magellen gets most of their diesel from Texas, and when they ran out, it put too much of a demand on the rest of the suppliers. I know this to be true, Grand Forks, Moorhead, Alex, and Sauk Centre terminals all have serious supply issues for diesel. During harvest season, this is not a good thing. I expect the prices to go up again, but will fall eventually.

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upnorth Grand Master

upnorth

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Ya know what this kinda stuff happening may just push along the pursuit of stuff like bio diesel. If they can speed up their production and keep the costs down it may become more cost effective than regular diesel.

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JohnMickish Grand Master

JohnMickish

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I'd like to throw in here as this has come up many times in the last few months. You cannot compare the fuel prices in Europe to what we pay here. European countries have socialized medicine and it is funded from the fuel tax. So if they are paying $4.00 per gallon and we are paying $2.50 per gallon plus $1000 or whatever per month we are actually paying much more. I know alot of people think that they are comparing apples to apples but it's not.

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ScoutII Collaborator

ScoutII

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So if the high prices are do to shortages in supply, why is there still fuel at the staitions to sell? I have not seen any fuel staitions CLOSED because they have NO fuel. Or has someone figured out how to make fuel from cash.

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TSCTSC Proficient

TSCTSC

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In Europe and other parts of the world where gasoline is not as heavily subsidized, diesel is significantly cheaper than gasoline. Therefore in Europe, great fuel savings can be achieved when you buy a diesel. However, what they pay there for diesel is about what we are paying here for diesel now. Only difference is that because gasoline here is so much cheaper, that it is actually below the price of diesel.

Basically, this wierd discrepancy is really due to the relatively very low price of gasoline that we are paying here in the USA compared to anywhere else in the world.

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CodyDawg Mentor

CodyDawg

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Scout II,

The shortages are happening at the wholesale level right now. You may start to see bags on pumps and you may not as stations can get a load from far away, but they end up paying more $$ in trucking which results in higher prices. But realize, the shortages is what is locally driving this price hike in combination with the heating oil issue and of course profiteering. My dad owns a petroleum trucking firm, and this was accurate as of my conversation with him wednesday I believe. I havent talked to him since though, so maybe some of the terminals got some diesel in.

One of the things that receives little or no press is the profiteering that takes place on futures contracts. This also affects the price.

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setterguy Veteran

setterguy

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I just did a breakdown of price per mile on my truck, and its not as bad as I thought it would be. Here we go.

1 gallon of diesel fuel = 3.50

Average fuel economy with my truck (6.0 powerstroke) = 17mpg

Cost per mile = .2058 (21 cents)

1 gallon of 87 octane = 2.40

Economy of 3/4 or 1 ton gas pickup (average) 12mpg

Cost per mile = .20 (20 cents per mile)

So even at these high prices a diesel truck isn't too bad commpared to a gas vehicle with the same payload/towing power, that probably still doesn't equal a diesel. So all in all I don't think we are doing too bad....yet.

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McGurk Grand Master

McGurk

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Setterguy, you just went and took all of the fun out of being negative about fuel prices wink.gif!

Your numbers make sense, but I still don't get the additional markup that seems pretty lopsided compared to previous winters. There have always been economic factors affecting fuel prices, and I'm sure once Hurr. Wilma hits we can expect more B-as-in-B S-as-in-S about why the prices are skyrocketing again. I actually felt good about filling up with gas for $2.39 earlier this week. Pathetic.

Good Luck! McGurk

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Valv Grand Master

Valv

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Quote:

not realy, dont forget to justify the $4-5000 more you pay just to own one.

Not really don't forget they last twice the gas models.... grin.gif

Setterguy......shhhh...if you reveal secret they will ALWAYS keep price higher wink.gif

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