Why Is Diesel More Expensive?
Gas costs around $3.25 in the Twin Cities which is about a dime shy of the record, but it’s nothing compared to the price of diesel. So why is diesel so pumped up?
It’s hard to complain about filling up a 20-gallon tank after watching Randy pump 170 gallons into his truck at $4.05 a pop.
“I’m paying almost $700 for a tank of fuel. I was glad to fill up for $350 a year ago,” said Randy.
Diesel used to be cheaper than regular unleaded. Now, it can be almost a dollar more a gallon.
David Morris is the vice president of the Institute for Local Self-Reliance, and an expert on energy said diesel prices are soaring.
“Diesel is what gets the goods to market; diesel is what runs the factories. Gasoline gets us to the store work. But basically the economy runs on diesel in the United States,” said Morris.
He said just like with regular unleaded, worldwide demand is outpacing supply. However, overseas they use a lot more diesel than unleaded.
“Globally we’re having an increased demand for diesel, faster than an increased demand for gasoline and that is stressing refineries,” said Morris.
Plus the U.S. has a new environmental requirement to get the sulfur out of diesel.
“So most people think that that alone has increased the price of diesel anywhere from 15 to 20 cents a gallon,” said Morris.
While there is a possibility to increase production of diesel, there’s no rationale in the United States.
“When one barrel of crude comes through, a barrel contains 42 gallons, what comes out is up to 50 different products,” said Morris.
In the U.S. that barrel becomes 19 gallons of gasoline, just eight of diesel. Four gallons goes to jet fuel and the rest to things like plastics.
“Factories will learn to be more efficient. Truck engines will become more efficient and delivery systems will become more efficient and that’s just a way of life,” said Morris.
In Minnesota, diesel is 2 percent biodiesel. So in theory, that should lessen the impact of high crude oil prices. However, biodiesel’s main ingredient is soy oil and the price of that has gone up at a faster rate than crude.
Source: WCCO
Tags: diesel price, gasoline, USA, Useful information