Posted By RichC on March 18, 2008
Wow … an 83 cents per gallon spread between unleaded regular gasoline and ultra low sulfur diesel. I ran out to Krogers (grocery store) last night and noticed the fuel prices again … as we all have been noticing lately. This 83 cents per gallon spread even starts make the diesel vehicle fuel economy benefit disappear. I can’t help but believe the latest dollar per gallon increase is bound to accelerate inflation … especially since the Fed pumps more liquidity into the market. The cost of products will soon be seen in the price of goods since diesel fuel is used in farms, construction and shipping.
As for reasons … here is what the Department of Energy has to say:
Why are diesel fuel prices higher than gasoline prices?
Until several years ago, the average price of diesel fuel was usually lower than the average price of gasoline. In some winters when the demand for distillate heating oil was high, the price of diesel fuel rose above the gasoline price. Since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline all year round for several reasons. Worldwide demand for diesel fuel and other distillate fuel oils has been increasing steadily, with strong demand in China, Europe, and the U.S., putting more pressure on the tight global refining capacity. In the U.S., the transition to low-sulfur diesel fuel has affected diesel fuel production and distribution costs. Also, the Federal excise tax on diesel fuel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline.