Hello bohdan~
I, too, have been wondering why diesel is more expensive than gas,
since it is less refined and therefore should be cheaper to make. My
initial reaction is what I posted below: price gouging. But, according
to experts, there may be more to it than this. Opinions seem to vary,
but here are the ?official? excuses:
INCREASED DEMAND, YET HARD TO COME BY:
According ?This Week In Petroleum,? the cost of diesel first became
higher than gas in September of 2004, as crude oil prices were rising.
?While the crude oil price increase impacted both products similarly,
diesel fuel prices reflected an additional tightening in distillate
fuel markets...? (?Gasoline vs. Diesel Fuel:?
http://tonto.eia.doe.gov/oog/info/twip/twiparch/041103/twipprint.html
)
The article also points out that September and October are the
beginning of ?the heating season,? and therefore produce higher demand
for heating oil. Since heating oil is very similar to diesel (the main
difference being that diesel has less sulfur), increased demand for
heating oil ?often put increased pressure on diesel fuel prices as
well.?
Diesel is also used for harvesting crops in the fall...another reason
diesel prices may rise toward the end of a given year.
The ?This Week in Petroleum? article (which includes some interesting
graphs) concludes: ?For diesel...prices have increased more than crude
oil prices would dictate, due to increased price pressure in diesel
fuel markets related not only to the seasonal increase in demand for
this time of year, but also due to a growing economy. As a result, a
relatively wide gap has opened between retail diesel fuel and gasoline
prices.?
An October 2004 article at About.com adds another bit of info: ?One
reason diesel prices have risen faster than gas prices is that the
national distillate fuel supply--which includes diesel as well as
heating oil--has dropped five weeks in a row. Almost half of the US
supply of gasoline originates in the Gulf Coast region; weather
related issues are cited as the reason for reduced inventory.?
(?Diesel Prices Hit Record Highs,? About.com:
http://uspolitics.about.com/b/a/122542.htm )
SUPPLY & DEMAND:
USA Today makes similar arguments about the price of diesel, and adds
?High gas prices attract foreign supplies and encourage motorists to
drive less. The result: Supply rises, demand falls, prices come down.
But diesel fuel is used mainly by over-the-road trucks, trains,
farmers and other businesses that can't simply cut back.? (?Diesel
fuel prices follow oil uphill,? USA Today:
http://www.usatoday.com/money/industries/energy/2004-09-27-diesel_x.htm
)
EXPERT PREDICTIONS:
This would make one assume that diesel prices should drop soon, but
?Fleet Owner? claims that ?the U.S. Dept. of Energy (DOE) has
projected no major relief for diesel prices through 2006, mostly due
to worldwide energy demands expanding more rapidly than crude oil
production growth.? (?DOE: diesel will remain high but stable,? Fleet
Owner: http://fleetowner.com/news/topstory/doe_diesel_price_high_stable_021405/
)
?The good news is although diesel prices will remain high, at least it
appears to be stable,? the article says. ??Basic supply factors
indicate stabilizing price patterns and stabilizing supply,? DOE
economist Jacob Bournazian told Fleet Owner. ?Refiners have increased
low sulfur diesel production capabilities since last year.? And for
the next four to six weeks, Bournazian expects diesel prices to
stagnate or drop slightly as demand for distillates falls 5 to 10%.
?The best you can expect is a penny or two decline based on the stable
crude prices,? Bournazian said. ??After April you will see prices
decline another penny or two.??
Kriswrite
KEYWORDS USED:
diesel "higher than gasoline"
diesel prices |
