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Why Is Diesel Fuel So Expensive?

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Comments

  • gagricegagrice San DiegoPosts: 28,845
    The funny business is we keep printing more money and it is not worth as much. The price of oil bottomed in 1998 at just under $10. It was back to the old price of $30 by 2003. The jump since then has been a bit much. Not sure how to explain it. It really defies logic for me. It seems with our control of the second largest field in Iraq we should be able to manipulate that price downward a little. Or maybe we are trying to squeeze the other players out of the market. I cannot believe the working class in China and India can afford those prices.
  • british_roverbritish_rover Posts: 8,476
    They can't but the enormous middle to upper middle class can and that group is the most rapidly expanding group in both countries.
  • kdhspyderkdhspyder Posts: 7,160
    'Our' price of $105-$110 /bbl is different than the europeans and other countries prices. If they pay the producers in euros for example then 'their' price is roughly equivalent to about $80 a gallon. Our 25% 'premium' is primarily due to the fall in the value of our dollar. The Euro has gained in strength so the buyers in Europe have seen an increase but nowhere near what ours is.

    In the final analysis the actual price of oil or of gasoline doesn't matter one single bit. It is what it is and they ( producers and marketers ) should adjust supply, jack up prices, charge what the market will bear simply because that's good capitalism.

    The only thing that matters is you and I and the rest on these boards. As long as each of us continues to go to the pumps and fill up to our heart's content then they, the sellers, have ready buyers and the market is in perfect balance.

    Solution: don't buy their product. Watch the prices come down. I drive the same as I did 5 and 10 yrs ago but I use 25% less today than I did back then.

    Don't buy their product!!!! Use less.
  • kdhspyderkdhspyder Posts: 7,160
    Yep the sheer size of these two countries is something few of us have any real inkling. If the wealthy and very comfortable in these two countries is just 15% of their combined populations then that small segment is greater than every man, woman and child in our country.

    It would be as if every aged person, every 3 week old infant, every street bum and struggling immigrant ( legal or not ) in our country was a millionaire with money to spend as wildly as they wished.
  • hpmctorquehpmctorque Posts: 4,167
    The Wall Street Journal features an article about once a week entitled "Me & My Car", in which columnist johnathan Welsh answers readers' automotive questions.

    In today's edition of the Journal, in Section D, page 4, a reader from NJ asks, "Why has diesel fuel become so much more expensive than gasoline?..."

    Welsh answers, "The price of diesel fuel has been generally higher than the price of regular gasoline since September 2004 and is now more expensive than premium. International demand is the mains reason that prices are high today. Growing demand in China, Europe and the U.S. is putting pressure on strained global refining capacity. The move in the U.S. to ultra-low-sulfer diesel during the last two years has also led to increases in the cost of diesel production and distribution. The federal excise tax on diesel fuel is six cents higher per gallon (24.4 cents per gallon) than the tax on gasoline..."

    although these reasons have been cited in some previous messages, I thought that posting Welsh's answers relating to this discussion would be worthwhile, since the WSJ is generally considered to be a reputable source.
  • larsblarsb Posts: 8,204
    This page does a fine job of explaining the current diesel price scenario:

    What every consumer should know about diesel
  • andys120andys120 Loudon NHPosts: 16,592
    A freind who owns a convenience store tells me that his suppliers think Diesel is soaring partly because the Chinese have converted coal-powered factories and power-plants in Northeastern China to burn Diesel in an attempt to clean up the notoriously polluted air in the Peijing area for the 2008 Olympics.

    If they switch back to cheap and plentiful coal after August, Diesel prices should decline considerably.

    2000 BMW 528i, 2001 BMW 330CiC

  • texasestexases Posts: 5,510
    "A freind who owns a convenience store tells me that his suppliers think Diesel is soaring partly because the Chinese have converted coal-powered factories and power-plants in Northeastern China to burn Diesel "

    Hope that's true, but all I've read about is them building new coal plants 1/week. The conversion to fuel oil (not usually diesel) is pretty expensive.
  • british_roverbritish_rover Posts: 8,476
    Ehh that doesn't really make sense. They probably wouldn't convert to diesel they would convert to the cheaper bunker fuel oil which is cleaner then coal but dirtier then diesel.

    The conversion to either diesel or bunker fuel would be very, very expensive.
  • chadxchadx Posts: 153
    Hmmm. Your post would have made better points without the exaggerations and/or "conspiracy" mood. I can't resist but ask a few questions and make a few comments.

    "The truth of the matter is in reading between the lines. Diesel is not expensive in reality due to supply and demand, but that is what the mass media and experts would have you believe to be true. "

    Even if you are saying that the oil companies are limiting production and that is what is causing the high prices, that is, in fact, supply and demand. Low supply increases demand on what is available and so impacts prices. So how are current diesel prices not a supply and demand issue?

    "Think I'm full of it, start doing your own research, please..!!! The oil CARTELS and yes that is what they are..."

    I guess the same can be said for Harley-Davidson, then, since they created high prices and high demand, for years, by limiting production. But, for some reason, people praised their business model.

    "...reserves(and I'm not counting the military reserves, which are good for approx 100 years or so) but the public reserves."

    I'd be interested in where that number came from. Our military has 100 year supply of gasoline/diesel? That is not possible. First, neither age well. Second, do you know how many gallons the military uses PER DAY? Perhaps you were saying stored crude oil, but again, not possible to store that much. Plus, it would have to be refined and that isn't something that can be done on the fly.

    "They have the oil, already refined to light sweet crude stored outside the USA and they bring it in as they need to control the pricing."

    Light, sweet crude is crude oil. It is not refined. Light crude means the American Petroleum Institute (API) gravity test of more than 31.1 degrees. Sweet crude is low sulfer rate (0.5% sulfter). Light, sweet crude is the easiest crude to refine but crude is not "refined" to be light and sweet.

    "CA having some of the highest pollution rates, has the higer prices for diesel fuel as they must refine it more than other places. That is politics my man ! "

    While I agree it would be easier to have one standard for diesel throughout the country, there are good reasons for the different grades. It's not just politics. Especially when it comes to low sulfer for reduced pollution. It's healthier for everyone. Not unlike when lead was removed from gasoline.

    "Don't be one of the sheep! BE A WOLF ! "

    I think you might have the symbols a bit mixed up. While I'll not be a sheep, I disagree with being a wolf. Be a sheepdog. A sheepdog keeps away the wolves (thieves, criminals, and those that prey on other people/sheep).

    You may want to read the following:
    http://godgunsglory.com/2007/07/04/are-you-a-sheepdog/
  • gagricegagrice San DiegoPosts: 28,845
    High diesel prices is purely a supply issue. If I remember correctly. After Katrina tore up a couple refineries, two refineries were converted from diesel to gas. We also have been in the transition from 500 PPM sulfur diesel to ULSD. Not all refineries are producing ULSD at this point. Being a mixed bag of distillates does create supply problems in the winter when the demand for heating oil is high. As of today gas prices are catching diesel prices here in CA. It is later than usual.
  • chadxchadx Posts: 153
    " I cannot believe the working class in China and India can afford those prices. "

    What prices? China has a cap on gas prices so the prices are currently artificially low (lower than the cost of production) and the refineries are lossing major money. That is even with the government allowing a recent price hike. I'm not sure about prices in india, but I don't think they are having the "must own a car" panic that Chinese public is going through currently.
  • british_roverbritish_rover Posts: 8,476
    India has raised their prices as has many other Asian countries but none of them have the power of China to effect oil prices. If China lets the price of fuel float up even just a few percent so that it is still well below the market average but more expensive then the people are used to it will have a large effect on demand.

    China is the 800 lbs Panda, sorry couldn't resist, in the room.
  • chadxchadx Posts: 153
    "If China lets the price of fuel float up even just a few percent so that it is still well below the market average but more expensive then the people are used to it will have a large effect on demand. "

    I guess time will tell on that, but a "few percent" probably won't make much of a difference. Few folks in the US changed their habits until the price doubled. That's 100% increase, not just a few percent. I would expect the Chinese to react the same. There is such a mindset there that everyone has to have a car to show their success. I would expect it to take a pretty big hike in price to change behavior. For better or worse, that 800lb Panda has discovered it like it's cars as much as us. :)
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