The Villian In The Diesel Fuel Price Disparity

[omgwtfbyobbq]

Originally Posted by Big Dave

Will it result in lower cancer rates, or decreased asthma rates?

That's pretty much the whole basis for it. While it isn't an issue for most, due to trade it's really bad in certain regions, hence the legislation. More or less, certain states are tired of paying for the externalities of said emissions, such as premature deaths, health problems, and diminished productivity. Since the amortized cost of retrofitting the fleet is so much smaller than this, they initially announced they were going ahead with these plans and provided incentives for the worst emitters.

As for why this diesel price spike is greater than others, off-road use switched to lower sulfur diesel while a cold spike drove up demand for heating oil, and as such the prices of all distillates have increased to reflect this change in demand. It's detailed here.

However, as discussed in the January 24, 2008 issue of TWIP , inventories of high sulfur distillate fuel, the product specifically identified as heating oil, were relatively low, even from the outset of winter, due to a shift of a significant portion of high sulfur distillate usage (the off road sector) to low sulfur diesel fuel consumption. Inventories, particularly in New England and the Middle Atlantic regions, remain at relatively low levels, reflecting the strong global market for distillate fuels.

I'm guessing the reason why this wasn't seen during the initial switch to ULSD is because that was during the summer, when diesel prices tend to drop. Switching off-road to ULSD when demand for distillates was higher resulted in even higher prices. Also, given the current crack ratios used, the relatively low demand for gasoline might have served to exacerbate low distillate stocks.

Ironically, bulging gasoline inventories and associated US gasoline market weakness may have exacerbated distillate markets by reducing outlets for surplus gasoline production, which accompanies distillate production.

[GasSavers_Randy]

Originally Posted by Big Dave

I would ask Randy this: If they don?t add up, how do you explain the 70-90 cent per gallon price disparity between unleaded and diesel?

Diesel should be somewhat (10-20%) more expensive than gas, due to higher energy per gallon. It was cheaper in the US before the 90's because of the relative demand and the expense of refining it into gas. As the technology improved, refineries installed equipment to do that, pushing gas and diesel closer to even. Now worldwide diesel demand is high and growing fast. Europe increasingly uses diesel for personal use, leading to more gas and less diesel for export. Industry needs diesel in developing countries. But gasoline use in the US is actually down slightly. Ethanol prices are way down (10+% of gasoline). Refineries need time and investment to adjust to this new demand. Long term this should work itself out.

I still think that ULSD can't be the cause of the diesel price spike, because heating oil is also very expensive. If worldwide diesel demand is the cause it should push their prices close to the actual costs of upgrading the fuel (most world diesel is closer to heating oil).

In recent years, gas has gone way up in summer. Probably it won't go over diesel, but it's possible. Certainly it will be a lot closer in a few months than it is now.

[Lug_Nut]

Originally Posted by Big Dave

Lugnut posted?
??to temporarily drop pump price by a penny or two??

No. What I posted was "...to temporarily drop pump price by a penny or two until profit greed eats that up,..." The pump price has been shown to not be a dissuading factor in use levels. If the COST goes down, don't expect the PRICE to go down. If we willingly pay $4.20 a gallon today for fuel that costs the station $4 a gallon, why would we not pay $4.15 a gallon next month for fuel which costs the station $3.50?

[omgwtfbyobbq]

Originally Posted by Lug_Nut

If we willingly pay $4.20 a gallon today for fuel that costs the station $4 a gallon, why would we not pay $4.15 a gallon next month for fuel which costs the station $3.50?

That depends on whether or not said gas stations can form an effective cartel. I think it would be quite hard now.

[Big Dave]

Out here on the frozen steppes the differential is now up to a buck a gallon. $3.05 for unleaded. $4.05 for diesel. Thats a 33% premium. The heating value difference might justify a 16% premium.

Something this big and widespread is beyond mere short term pricing what the traffic will bear. It is the result of government regulations.

[omgwtfbyobbq]

Originally Posted by Big Dave

Something this big and widespread is beyond mere short term pricing what the traffic will bear. It is the result of government regulations.

So if price drops back down to the usual levels later on, does that mean these government regulations have been repealed?

[bowtieguy]

Big Dave and SD26,

SOS(tuff)...

gov't knows best, global warming, increased taxes are a must, etc.

tho i use diesel everyday, i can't speak on the subject. however, i do know another branch of gov't...

the USDA comes to my workplace(wholesale produce) by charged appointment if we desire it. this helps us to cut losses(shrinkage) due to poor product being sent. we can only refuse it IF the USDA deems it a "bad shipment."

NOW, the USDA employee will ask to see a predetermined % of the load. so, let's arbitrarily say that 50% of the load is molded. if the handful of cases of that particular item that he/she selects are fine, we MUST accept the entire load AT OUR LOSS!!!

our facility is certified by several gov't and non-gov't agencies. so we do in fact take a loss by throwing the product away. other produce companies DO NOT(they send out as much as can be). the health ramifications do not need to be dicussed i presume!

so, our fine gov't asks companies to take a loss and leaves the fate of the health of the general public to those that may or may not have integrity. sound familiar?

[GasSavers_SD26]

Completely.

More socialist actions that don't allow the citizens to be responsible for their decisions.

Too much over the top protection.

The diesel boondoggle is what it is Big Dave. Short version was fine from you. It makes everything more expensive, and, of course, it hits those with lower incomes harder than those with incomes above them...and the cycle of those that want to tax more "the rich" to redistribute wealth to others continues after that.