Quote:
Originally Posted by speeder
OK, but $1.00 a gallon difference??  |
Low sulfur regulations have little or nothing to do with it. OK, maybe 10 cents a gallon difference.
Up until recently, there was plenty of diesel to go around. We were importing quite a bit of cheap diesel fuel and that kept prices down. Then, other countries started competing for that cheap diesel fuel because their demand went up. Their industrial demand increased, they wanted the same cheap diesel as us, so it wasn't as cheap as gasoline anymore.
We (the US) cannot currently produce enough diesel to meet our own demands. The US imports about 6.3 million gallons of diesel per day. When that diesel (distillate fuel oil) was cheap, we sold it cheap.
When it went up, we had to pay more so you had to pay more.
The US refineries are scrambling to change that, we are modifying our process plants to increase our diesel production at the cost of gasoline production. The refinery where I work has managed to increase diesel and jet production by about 500,000 gallons per day. We had to kill 600,000 gallons of gasoline production to do it. That's about as much as we can do without major construction which is in the works.
That is how we are staying alive. Diesel and jet fuel is profitable, gasoline is a loser right now. Gas costs more to make than we are selling it for. We're still making is just to maintain cash flow, but we can't do that for much longer. The industry is already starting to slow down production and shut down some plants.
Unfortunately it takes a long time and many $millions to change process unit designs to be able to make significantly more diesel.
Over the next year or two these projects will come on-line and the price of diesel will drop. All those millions we are spending to make more profit will eventually cut our profits and will be a waste, but the consumer will benefit. And they will curse us for making their life better because they are ignorant and don't know any better.