Diesel Worx

Have you ever wondered why diesel costs more than gasoline? Here's the science. Diesel has been more expensive than gasoline in the US since 2004. And it's a conspiracy. Oh, not really. But the government does play its part. It switched from low sulfur diesel to ultra low sulfur diesel between 2006 and 2010. Increased production costs about six cents per gallon. Thanks, CPA. And the federal excise tax on diesel is six cents higher per gallon than gasoline. Those taxes are supposed to be used to repair transportation infrastructure. Diesel powers the vehicles that do the most damage to roads and bridges, so diesel fuel is taxed at a higher rate. Thanks, DOT. But supply and demand are the biggest drivers. A barrel of crude is 42 US gallons. And after refining, it'll yield 20 gallons of gas, 10 gallons of diesel and other heating oils, and 15 gallons of other products that are known to cause cancer in the state of California. And that's not a misprint or a brain fart. Crudes a lot If you crush a bucket of corn, the crushed corn won't fit back into the bucket that it came out of. It's called process gain. And it'science. Probably. So at a production rate of two to one, gas has an obvious advantage on the supply side. And as an American, that ratio seems appropriate, because American cars are filled by gas, but the world economy is fueled by diesel. So when the world economies are strong, the demand for diesel gets higher, and so does the price. When world conflicts create oil import and export restrictions, the supply gets low in certain areas, and the price goes up. And because diesel and heating oil come from the same cut and the distilling process, when old man winter comes around and the demand for heating oil goes up, the supply of diesel comes down, and the price goes up. And although Uncle Samuel has an effect on the price of diesel through taxation and sulfur restrictions, it's the world's higher demand and lower production rate that keeps the prices of diesel higher than gasoline. And higher diesel prices mean higher bacon prices. And that's a conspiracy.