OT Fuel oil

Greetings,

You are answering part of your own question without even realizing it. As we all know, diesel fuel is the same as No. 2 fuel oil, which is the same thing as home heating oil. The only real difference is that on-road diesel fuel may have certain additives but that is not a significant cost in the price of a gallon.

The price of diesel is cyclic over the course of the year, which is the same as the price of gasoline but on an opposite cycle. In the summer, gasoline prices go up because that is the "driving season" and usage goes up, but the price of diesel goes down. Why? Because in the winter a certain percentage of diesel fuel production is shifted to home heating oil, which boosts the price of on-road diesel because of the reduction in supply for vehicles, and in the summer (when nobody is using home heating oil) the supply of on-road diesel goes up allowing the price to drop. Obviously in the winter the price of gasoline is supposed to drop because the demand is lower. This past fall, however, not enough diesel production was shifted to home heating oil and available stocks were quite low at the start of the winter - this caused a spike in the price of diesel as refiners rushed to make up the difference and tightened up the available supply of diesel fuel for on-road use.

Of course, supply and demand on the consumer end is only one factor driving the price of fuel. You still have to consider such factors as the price of a barrel of oil, the available world capacity (which countries are pumping more and which less), the available refining capacity, and any transportation issues that may crop up (like a pipeline accident, etc.). Plus there is the factor of speculation in the future prices that adds volotility to the market as well.

Although it is easier to produce diesel fuel than gasoline in the refinery, the refining cost is only a fraction of the cost of a gallon of either fuel. Even though it costs more to produce gasoline, we produce much more of it than diesel and the difference is minimized in the ecomony of scale. If you went to a refiner and only purchased one gallon of each then Yes, the price would be significantly different in favor of diesel; but a few billion gallons later and the price difference due to refining cost is more than absorbed, especially consered the other factors driving the price of both.

Hope that helps, even if just a little.

Cheers - Jonathan

The only logical explaination is: market, the ability of the consumer to pay. Companies will charge you as much as they know you are ready to pay. It is, indeed, not right that diesel fuel should cost more than gasoline. IMHO.

It IS cheaper to buy in at least some parts of Europe. Norway, with which I am familiar, sells diesel at about 10% less than gasoline.

That should give you a clue.

It's cheaper in Budapest, Hungary too.

Thanks, Jonathan, that nicely makes quite a bit of sense.

Dave

Retail price has nothing to do with production cost.

"Demand" is the driving force.

Hi demand = Hi prices

The sulphur has to be removed to comply with US Gov't ULSD standards. It is neither easy nor cheap to do so.