Diesel fuel prices

The short answer is: The end user price of diesel fuel in the USA is
relatively cheap when compared to world market prices. But in saying this,
the price of Diesel fuel as with ANY commodity is a function of the sum of
its cost factors. Among these factors a Supply, Refining capability,
Transportation costs, Federal regulation, Federal / State / Local Taxes.
In the EU, there are few competitive markets for petroleum products. Most
countries have nationalized their petroleum industry and can charge what
they want or subsidize the cost.

Recently, North Slope Oil has been curtailed due to a decade long practice
by British Petroleum to zero or near zero maintenance on the infrastructure.
Running compressor turbines until it fails. Flow control valves are not
preventatively replaced and under this philosophy fail and tend to fail
catastrophically. So now, Prudhoe Bay supplied crude is flowing at a
trickle of what it was prior to the shutdown and presently, this gives rise
to a supply deficit issue. Weather in the Gulf of Mexico with Hurricane
Katrina brought about supply, transportation, and refining capability
issues, so prices get squeezed upward there. As it relates to supply, you
now have the nations of India and China, going out and purchasing refined
fuel as well as crude oil to fire the engines of their respective economies.
So, its not just the USA looking for raw crude and refined product, but
those countries as well.

New Federal / EPA regulations mandating the blending of diesel fuel to more
closely match the formulation of what is produced in the EU are now
impacting costs. USA Diesel #2, has a higher sulfur content and is
unfriendly to the newer generations of Diesels soon to come to market in
the next 2 to 4 years. Transportations costs are relatively minor due to
our US Interstate Highway system which allows for a cheaper cost of moving
goods and services from point A to point B than it is for people in the EU.
Of course, the exception being for remote places in rural areas especially
remote villages in Alaska.

As it relates to taxes, it would not surprise me to hear that out of each
gallon of diesel fuel or gasoline, that the combined take of Federal / State
/ Local taxes almost, if not exceeds, at least 1 dollar per gallon. I
can only imagine what the taxes are in the countries of the EU or Canada.
If you are from the UK / EU or Canada, please let us know how much of
what you pay for the price per gallon is eaten up by taxes. This would be
fascinating to know.

I don¹t know if Bio-diesel is going to solve anything either in the short or
the long term view. Its probably going to be the proverbial "drop in the
bucket".

I have dealt with the spike rises in fuel costs to a curtailment of
activity. I ask myself twice, Is this run to the market necessary or of
convenience. If convenience, I make a note of what I need in order to
combine the times when I do run out, that I make a 1 time loop and catch
every thing that I need or that I leave early for work and plan a route that
takes where I need to shop that is on the way to work. Since March, I have
combined going to work on the mass transit bus system that allows me to take
a bicycle along and ride the bike home when buses are not running. By doing
this, I saved the consumption of 15 gals of gas per week @ near 2.90 US$ per
gallon cost. I am currently looking at apartments near where I work so that
I only have a 10 or 15 minute walk one way.



Just my 2 cents / 2 pence / 2 dinars worth

Terrence




>>> Paul L. Hidey <cyclefan@... wrote:
>>>> I don't know if this has been discussed before, but could someone in
>>>> the know, explain why diesel fuel is so insanely high?
>

My take (at least why Diesel is more than gas in my area is that Truckers
have to buy diesel but families don't HAVE to go on vacation. So increase
the cost of diesel (which is cheaper to make) so you can keep the gas
prices "low". This way you make the Truckers pick up the difference to
keep the cars on the road.

But what do I know....

Dave

In article outautos.com>, "ironhorse" > wrote:
>My take (at least why Diesel is more than gas in my area is that Truckers
>have to buy diesel but families don't HAVE to go on vacation. So increase
>the cost of diesel (which is cheaper to make) so you can keep the gas
>prices "low". This way you make the Truckers pick up the difference to
>keep the cars on the road.
>
>But what do I know....
>
>Dave
>

It's a supply/refining issue. In Europe a much larger proportion of cars
are diesel (as if you didn't already know this). What puts the upward
pressure on Diesel prices vs Gasoline is the refiners. In recent (last 10
to 15) years the major refiners have invested in distilling gasoline to
maximum efficiency. This investment has a relatively slow return about 20
years. Meanwhile demand for diesel has increased thanks to the Europeans
moving into diesel cars. The result is demand for diesel has increased at a
greater rate the refiners are willing to increase production of diesel
(relative to gasoline). Long term projections (US petrolium institute) are
that the price disparity will likely be with us for at least another 10 or
so years. An added recent cost in the US is the federal regulation
mandating a lower sulfer content in diesel fuel effective this past January
(2006). This regulation has added several cents to the retail price of a
gallon, on the other hand it may prove to significantly improve the health
of our children by reducing the amount of asthma promoting particles in the
air. I personally hate the higher price, but if a few kids can play on the
monkey bars outside and few extra days a year, I can afford the money.

Just as a side note if you are interested in tracking the wholesale price
of diesel, follow home heating oil; Reuters commodity pages(NYMEX). It
tracks almost in lock step with diesel fuel-rarely more the a penny or so
price spread between diesel and heating oil. You should as we get closer to
the fall in the US see the price begin to decline a bit just before the
home heating season begins.

fundamentalism, fundamentally wrong.

> Just as a side note if you are interested in tracking the wholesale price
> of diesel, follow home heating oil; Reuters commodity pages(NYMEX). It
> tracks almost in lock step with diesel fuel-rarely more the a penny or so
> price spread between diesel and heating oil. You should as we get closer
> to
> the fall in the US see the price begin to decline a bit just before the
> home heating season begins.
>

....and as we get closer to November 7th.

In article t>, "Papa" > wrote:
>
>> Just as a side note if you are interested in tracking the wholesale price
>> of diesel, follow home heating oil; Reuters commodity pages(NYMEX). It
>> tracks almost in lock step with diesel fuel-rarely more the a penny or so
>> price spread between diesel and heating oil. You should as we get closer
>> to
>> the fall in the US see the price begin to decline a bit just before the
>> home heating season begins.
>>
>
>....and as we get closer to November 7th.

That will be over all oil prices declining, diesel will see a slight drop
in price relative to gasoline in the early fall as refiners shift more to
home heating oil production. Of course the usual risks to oil prices are
still out there. Nigeria is no where close to settling their internal
political situation, so the 'marsh' people will continue to 'damage' oil
production and the regime will continue to overreact and not alter the way
the oil money is distributed. Iran will not stop building nukes; what
happened to Saddam in Iraq has taught them that lesson, he who actually has
nukes doesn't get invaded. Venezuela's socialist regime will continue to
find it popular with the people to tweak the gringoes in North America and
BP will continue to refuse to perform routine maintainance on its basic
infrastructure. These issues may find themselves outside the control of US
politics. The current decline in crude prices reflects a slowing of the US
and other major economys. So while the current regime in Washington
welcomes a break in 'gas' prices, it also indicates that job and wage
growth may be looking less then good by November. So they may not be able
to win for losing <wink />.

fundamentalism, fundamentally wrong.