Why diesel prices are outpacing gas prices
Brian Sprague fills his his car's tank with gas in Philadelphia, Wednesday, Feb. 16, 2011. Gasoline pump prices reached a 28-month high Wednesday even though oil and gas supplies in the U.S. continue to grow and demand for gas is weak.(AP Photo/Matt Rourke) Credit: AP Photo/Matt Rourke
Q. How did diesel get more expensive than gas so fast?
A. Diesel fuel prices have climbed rapidly in recent weeks, and some reports say at a faster clip than gas prices, as you have sensed. Both are affected by the recent surge in oil prices to more than $100 a barrel, but the federal Energy Information Administration says diesel costs more than gas at the pump for several reasons.
Diesel is in demand around the world. A higher percentage of vehicles in Europe run on diesel than in the U.S. Demand for diesel has grown in China in recent years, while the global capacity to refine oil into diesel fuel has not, helping drive up prices.
The U.S. now requires low-sulfur diesel fuel (as does Europe) to reduce pollution, and that increases refining costs. The EIA says refining costs are 17 percent of the pump price for diesel and 14 percent for gas. Moreover, the federal tax on diesel is 24.4 cents per gallon, 6 cents more than gas (state and local taxes vary).
At times, because of seasonal demands and other factors, diesel can be cheaper than gas in some areas. At the time of this posting, average diesel prices in Illinois are lower than regular gasoline prices with a gallon of diesel costing $4.143, and regular octane gasoline at $4.232, according to AAA fuel prices.
© 2011, Cars.com
