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Diesel fuel - Why the low price?
20 years ago, it was common for diesel to be cheaper than gasoline in the summer, and more expensive in the winter, due to fuel oil supply and demand. But diesel prices have been more expensive than gasoline, sometimes by a lot, for quite a few years. For the first time in a long time, diesel is cheaper than gasoline. What are the factors involved in all this?
3 Answers
- campbelp2002Lv 76 years ago
Supply and demand. More demand from more diesel vehicles. Not enough additional supply to meet the demand, even with increased petroleum production. Only part of the crude petroleum can be made into diesel. To get more diesel you need even more crude petroleum, but that also increases the supply of the other products that can be made from it, like gasoline, reducing that price. So the difference in price between gasoline and diesel will always be greater if the mix of engines needing each fuel is out of balance with the fraction of crude that can be made into each one.
- 6 years ago
Diesel is easier to produce than gasoline. Diesel has been higher than gasoline because of taxes. Diesel was taxed higher because most users are commercial vehicles which would pass the tax on to consumers without their knowledge, in the form of higher prices for consumer goods and commodities.
