Why Diesel Fuel Costs More Than Gasoline

I remember not too long ago when diesel fuel cost less than gasoline. Now diesel fuel can cost up to one dollar or more a gallon than gasoline. Why?

Well, each 42 gallon barrel of crude oil yields 19 gallons of gasoline and 10 gallons of distillate.

Distillate is what diesel fuel is made from. That same 10 gallons of distillate is also used to make home heating oil, jet fuel, kerosene, diesel-1 and diesel-2.

So you can see there are a lot of products competing for those 10 gallons of distillate in each barrel of crude oil.

The next factor is the world wide demand for diesel. In other than the United States and Canada the motor vehicle fuel of choice is diesel.

In Europe 45% of existing automobiles are diesel powered and more than one-half of all new automobiles are diesel fueled.

In addition to the trucking industry, diesel is the fuel used in almost all construction and industrial equipment world wide.

Ships, power generation plants, farm equipment, all rely on diesel fuel.

As countries such as India and China continue to develop, their rapidly expanding requirements for diesel fuel has a significant impact on the world wide supply.

In the United States the Federal tax on diesel fuel is six-cents higher than on gasoline. The Federal tax on diesel is 24-cents a gallon and on gasoline the Federal tax is only 18-cents a gallon.

The link below will take you to the United States Department of Energy, the Energy Information Administration and a clearly written and illustrated brochure titled:

Diesel Fuel Prices: What Consumers Should Know.

www.eia.doe.gov/bookshelf/brochures/diesel