Diesel cheaper than gas?

[dhoward]

What did I miss? Driving past my regular Phillips 66 this morning, Diesel = $1.84 Gas = $1.85.
Hope this isn't a repost...

[livi]

All things considered, from an environmental perspective, shouldn´t diesel be cheaper than regular gas?

[dhoward]

I always thought so, but apparently I've been wrong all of this time....

[Pazuzu]

Diesel should always be cheaper, if retail cost was based on production cost. Historically, it always was cheaper. The prices only inverted (diesel becoming more) about, what, 2 years ago? It became popular, so the retail cost got linked to the demand, not the production costs.

[dhoward]

I'm not certain that's as true as it once was. I believe diesel now requires more refining steps and additives than it used to. I'm sure someone who works in a refinery will chime in...

[Pazuzu]

Originally Posted by dhoward

I'm not certain that's as true as it once was. I believe diesel now requires more refining steps and additives than it used to. I'm sure someone who works in a refinery will chime in...

It's possible, but the price ratio made a HUGE inversion over a period of only a few months. I have trouble believing that even the ultra-low sulfur stuff went from costing (guessing here) 75% of gas to (again, guess) 150% of gas in production. That's a HUGE change. The fact that it coincided with the increased demand for diesel by consumers makes me believe that there was some price manipulation goin' on

My guessing was based on what I remember the relative costs to be while looking at gas station signs.

[dhoward]

I agree.

[peppy]

I saw this too, South Hill Va. yesterday D=$1.86, G=$1.94.

I filled up and wet my tires down.

[VINMAN]

It's about frickin time!!!

[exitwound]

Not here. Central PA. Gas is 1.99, Diesel is 2.49.

[David]

It's still not cheaper in Texas.

Where's sammy? Isn't he our resident expert?

[dhoward]

That's what I was waiting for...

[teenerted1]

i thought the reason diesel is more expensive due to the fact it has a higher tax added to it now to cover the increased damage that trucks do to the roads. they added these taxes a few years ago and that was why the price swapped.

[Brillo]

Mixed around here. Some places much lower than premium, ie. premium $2.35, diesel $2.07. Other places I have seen diesel slightly more than premium.

[sammyg2]

Diesel is not more expensive to make from a pure refining cost, but it is made of the same stuff, crude oil. Crude is by far the most expensive part. Gasoline is actually a volume positive product also, a gallon of fractionated feed stock can make more than a gallon of gasoline because it is less dense. Taxes have an affect. But those things only play a small part.

The big deal is that refineries were designed to make a bunch of gas and a little diesel, to match the market demands at the time. Remember most refineries are at least 40 or 50 years old, many date back to WWII.
Sure we've modified the heck out of them over the years to increase production and make cleaner products, but there wasn't any reason to make more diesel until about 18 months ago.

For a long time we could import diesel cheaply so there wasn't any incentive to spend billions to modify the plants. As more and more vehicles switched to diesel, the market demand shifted but the imports were still plentiful and relatively cheap.
Then markets abroad started using more and more diesel so we had to start competing for the imported diesel, so the price went up. Refineries have been modifying their process units to try and make more diesel and less gas, and that is starting to drive the diesel prices down finally but there is still more room to go.
It will eventually stabilize very close to gasoline prices, like i said the raw materials make up most of the cost to refine and help determine how profitable it is, hence how much refineries are willing to shift production. They will make whatever will make them money to the extent they are capable. Right now they are making some money on diesel and losing money on gas so they are making as much diesel as they can.
They still can't make as much diesel as they would like but it will take years and lots O'cash to make even more modifications. Cash is in tight supply right now and the refineries aren't spending anything on capital expenditures. It's too expensive to borrow money and they are barely profitable as it is, their stocks are way down. It's time to tighten the belt, not spend a few billion here and there.
Unlike someone we know

[woodman]

$1.97 tonight in the LBC. I can dig that. I think its a few cents less a few blocks over

[turbo6bar]

China has gone from a net importer of diesel to a net exporter. Domestic trucking industry is in a deep recession. The reduced demand is certainly having an effect on diesel pricing.

[Mericet]

Price for diesel is still higher here in Ohio as well. But the difference is getting smaller. Saw gas/diesel for the same price last week in Louisiana. (50 miles after I filled up at 20c more)

[lindbhr]

Diesel (distillate)prices are falling relative to gasoline because of our poor economy. Diesel demand for trucks and railroads is very soft domestically and overseas. As a result, US distillate inventories are at record highs pushing down prices.