What Are the Factors Behind Diesel Fuel Prices?

Taxes, Production, and Demand All Play Roles in Fuel Cost

For large vehicle fleets, farms, and other commercial ventures, the high price of diesel is an aggravating reality of life. Diesel has on-road and off-road uses that make it indispensable for many businesses. It’s diesel that fuels most of the fleets that deliver goods, or are used in manufacturing, farming, and more.

But why is diesel typically so much more expensive than gasoline?

What Drives the Price of Diesel

There are three factors that contribute to diesel’s higher price point compared to gasoline:

1. Regulatory changes. Increasing production costs have come from a 2014 Environmental Protection Agency standard. This regulation requires all diesel to limit its sulfur to 15 parts per million. This lowered diesel emissions significantly, but it also raised the expense of refining it.
2. Higher taxes. The federal motor fuel excise tax is 18.4 cents per gallon for gasoline but 24.4 cents per gallon for diesel. States also impose higher taxes on diesel.
3. Demand is always higher for diesel. Freighters, tractors, trains, forklifts, construction equipment — they all need diesel to run, and that demand is steady. But one barrel of crude oil only produces about 11-12 gallons of diesel, compared to 19-20 for gasoline.

Diesel vs. Gasoline

Another factor that affects the price of diesel is the difference between the two fuels and how they are processed.

Like gasoline, diesel is made from refined crude oil, but it’s less flammable and less volatile than gas, and delivers a lot more power. The distillation process separates the different hydrocarbons that compose either gasoline or diesel. Here are some essential differences:

• Diesel is denser than gasoline. While gasoline will evaporate in the air, diesel will not.
• Diesel is combustible, requiring compression and heat to work. Gasoline is flammable, which means it only needs a spark.
• Gasoline contains additives to aid its engine performance.
• Gasoline can break down much quicker than diesel.

Functionally, diesel produces 10 to 20 percent more energy in combustion than gasoline. So, diesel engines get more mileage per gallon than gas engines.

Reliable Diesel Delivery Solutions Add Value

When your business depends on diesel fuel to keep your fleet on the road and on the job, that fuel is more than just a line item in your budget. You need a partner who will deliver true value at a fair price. As a local, independent fuel company, we can’t do much to reverse the high taxes, refining costs, and demand driving up diesel prices (not to mention geopolitics and market speculation). But we CAN help make your diesel fueling easier!

Our commercial and business partnerships are important to us, and that’s why we strive to deliver real value that goes beyond competitive prices. Our friendly staff has fuel management expertise that takes the stress and guesswork out of commercial fuel deliveries. We’ve got the experience to understand your needs and help you plan, schedule, and manage your fuel deliveries. We can also help you track your fuel usage to reduce waste and improve efficiency. And we can work with you to plan a fueling station at your business or job site.

We’re always here to take your call. Contact us today to find out how we can make doing business easier for you.