Contact Street Smarts
Why does diesel fuel cost more than unleaded?, reader asks
Dear Street Smarts, Q: I'm probably beating a dead horse, but can you explain why diesel fuel is more expensive than gasoline and matches the price changes of gasoline even though it is not as refined as much as gasoline and is -- or at least was -- based on heating oil prices, not crude oil. When the demand for heating oil went down in the spring and summer, so did diesel prices and the reverse happened in fall and winter. Also, our gasoline has the special California blend that we pay mightily for but I do not believe there is a California blend of diesel, just good old No. 2. Even now, California diesel is around 50-60 cents more per gallon than the rest of the lower 48 states. Thank you for your work. Jim Holderman, via email A: I can't but Matt Skryja of AAA of Northern California can. Here's what he said: "Diesel in California is taxed -- a combination of federal, state and local taxes -- at ten cents higher than regular gasoline. Thats 76.0 cents vs. 66.1 cents," he said. "Beyond this, there has been an increase in global demand for diesel, which is higher than the increase in global demand for regular gasoline." That adds to the price difference in the two oil products, Skryja said. "Increased global demand for diesel means that, as we operate in a global market, diesel prices have increased more than regular gasoline:" he continued. "Refining capacity worldwide is tight, especially in the U.S., and this has added to the cost. Additionally, there are government regulations that require an 'acceptable' level of sulfur in diesel fuel, requiring refiners to produce 'ultra-low sulfur' diesel fuel. The additional regulations require higher tech components to process this type of fuel and the resulting costs are passed on to consumers." Learn more at http://www.eia.gov/tools/faqs/faq.cfm?id=9&t=9.