Originally Posted By: Susan
"Combine that with the typically greater price on diesel vs. regular gas, and it starts to make less and less sense to buy a U.S. spec diesel."

Diesel costs less to produce and was always cheaper than gasoline, until BigOil realized it had the truckers by the throat. Outright theft, and nothing else but.

When the gas hits $5.50 or more per gallon, I wonder how often the performance cars will get out of the garage?

Sue


It's not quite as simple as that.

First, Diesel and gasoline are both produced from the same refining process. Essentially, you only get so much of each from a single barrel of oil. Currently, there are two main types of refining processes used (fluid catalytic cracking and hydrocracking), which each result in a different proportion. The one used by most U.S. based refineries (fluid catalytic cracking) allows for a greater ratio of gasoline to diesel. Most European refineries use a process(hydrocracking) which creates more diesel and less gasoline.

Now, Diesel fuels used in over-the-road vehicles go through a further process for the reduction of sulfur. Recently we switched from using LSD (Low sulfur Diesel....not the narcotic) to using ULSD (Ultra Low Sulfur Diesel). This change made it possible to better our vehicle emissions significantly. Unfortunately, this increased the price of diesel fuel on average. To further increase prices, diesel fuel used in over-the-road vehicles is also taxed; typically more-so than gasoline. (average national fuel tax is 48.1 cents for gasoline vs. 53.1 cents for diesel)

Now you might ask yourself....why was diesel fuel traditionally always cheaper than gasoline? Reason was, it was basically an unwanted fuel. Our refining process was dedicated to gasoline production and most of our vehicles were designed around gasoline (which also meant gasoline was traditionally taxed more). Otherwise, we would just sell whatever diesel we weren't using to Europe or whoever else wants it.

Nowadays, diesel fuel is in much greater demand, especially since Europe and many other parts of the world are willing to buy just about every drop we produce. Therefore, our diesel prices are heavily reliant on the value of our currency vs. European currencies. In a world market, we're essentially in competition with Europe to buy the diesel we produce. Add to that an increase in overall cost from the additional sulfur reduction processes and an average 5 cent greater cost from taxes....it's easy to see why we're now paying so much more for diesel.

This is why there is such a big push towards plug in electric vehicles...we can produce our own electricity without being involved in such heavy worldwide competition for fuel. Unfortunately, what we need for this to happen on a wide scale isn't really here yet. Battery technology is lacking and our electric infrastructure is heavily outdated. Slowly this is improving, but we just aren't there yet.