$4.15 for diesel?

[donreitz]

A read an article awhile back describing two industrial methods of getting the gas, diesel, kerosene and other fractions from a barrel of oil. I don't recall the details other than the method used in the U.S. generated less diesel from a barrel of oil than the other method, which is common in Europe. Moreover, the ability to convert from one method to another is limited. Given (1) that constraint (2), the fact that the last U.S. refinery was built in 1979 (according to the article) and no new one is likely to be built any time soon, and (3) demand for diesel is increasing, this suggests that diesel will keep going up.

We lived in San Diego in the late 70s when Mexican diesel was a small fraction of the price of diesel sold at U.S. stations (I think it was about 25 cents a gallon). I used to take our 240D to Tijuana and fill up (it was one of the few instances of a manual transmission Mercedes sedan which made it affordable). I would run into American traveling salesmen waiting in line with Oldsmobile diesels with an extra fuel tank built into their trunks. I stopped doing this about a year into it when I took the car to the dealer for service. While sitting in the waiting room, the service technician brought in a soda bottle filled with what looked like oily root beer mixed with grit. He told me he'd drained it out of my fuel tank and said: "You get your fuel in Tijuana, right?" Between the water, grit, and other trash, there wasn't much actual diesel in the mix. I didn't want that crap running through my engine's fuel injectors so I stopped the trips to Tijuana.
Don

[purplesuebug]

Okay.............Yes I am a Bio-chemist and yes I work with alternative fuels, Bio-diesel, Oils and Ethanol. Now to clear a few things up, hopefully. Cracking is the process where they break large carbon chains into smaller, more combustible molecules like gasoline. They do not crack diesel. Diesel is too small and combustible to crack. They raise the temp to ~600C , lower the vacuum and add either hydrogen or a catalyst to perform the "cracking". To tell you the truth, the main reason for cracking petroleum hydrocarbons is to make Ethene..........the backbone to all plastics. The main starting material for cracking is the thick goo residues from distillation which fall into the asphalt group.


Sometimes, you need to combine smaller hydrocarbons to make larger ones -- this process is called unification. The major unification process is called catalytic reforming and uses a catalyst (platinum, platinum-rhenium mix) to combine low weight naphtha into aromatics, which are used in making chemicals and in blending gasoline. A significant by-product of this reaction is hydrogen gas, which is then either used for hydrocracking or sold.

And then there's "alteration" but I will spare you that one. It's just changing one molecule into another.

Bottom line................you can bet your sweet bippy that they are not going to change anything they are making money on. They are making their money on gasoline, diesel, heating oil and plastics. That is what brings the price up...............they know we will pay for it no matter what the cost. Sorry.....................had to vent, Marshall

[emam]

Another reason why I love this site. Who would have ever thought I'd learn so much about the process of Diesel with Comments like Marshalls and Don's

We figured we were going to change out our fuel filters once we got back from Mexico because of the mileage on our motor anyway, so hopefull a few thousand miles running the Mexican Cheap fuel wont damage anything.

Like I said, it sure does put a smile on my face when topping the tank off!

[JohnB]

Marshall

Cool post

John

[Makers Mark]

Marshal,
From your post, are you saying that it is less costly to make diesel than it is to make gasoline?? If so, are we to conclude that with the constant cost of raw crude that diesel costs less per galon to make than gasoline? Therefore, they are inflating the cost of diesel? Or is there just a supply vs demand issue with diesel? This feels like Myth Busters!!!
Jay

[donreitz]

I neglected to mention in my earlier post that the article I read suggested that the worldwide demand for diesel in particular is going up in large part because of growth in China and India. Assuming that demand continues to be high and that there isn't any practical way to increase supply in the short term (or even the long term in the U.S.), the law of supply and demand indicates that we can expect continuing high diesel prices.
Don

[purplesuebug]

You are forgetting Uncle Sam...........PA taxes diesel 63.6 cents/gallon, NY taxes 64.7 cents per gallon while OK only taxes 38.4 cents/gallon. For an answer to Jay's question, I borrow the following article dated March 10, 2008.................


Q: Why is diesel more expensive than gasoline and why is it pricier than it ever has been?

A: While diesel fuel traditionally was cheaper than gasoline, that's no longer the rule. The Energy Information Administration marks September 2004 as the turning point when the price of diesel fuel generally has risen higher than regular gasoline year round, not just during winter months when demand for heating oil, a cousin of diesel, puts pressure on the market.

There are several reasons for the new trend, says the EIA, but one of the biggest is global demand. More recently, the cost of crude oil, which broke another record at $106 a barrel Friday, has helped push up prices.

Retail diesel prices continue to set new records. On Monday, a gallon of diesel cost $3.944 cents in the Seattle area and $3.829 nationwide, according to the AAA Daily Fuel Gauge Report. That's more than $1 more than it was a year ago.

Diesel is in high demand and the market for it is tight, said Mary Novak, managing director of North American energy services at Global Insight, an economic and financial research firm based in Waltham, Mass.

"There is increasing demand for diesel both here and in Europe," she said.

To improve fuel economy, Europe has moved toward using more diesel vehicles in the past five years. About half of the cars in Europe now run on diesel.

"You have a huge market for it," Novak said, "not just truckers."

That's making diesel a premium product.

"Europe has a larger market for diesel. Since we now have a premium product, it can be sold into any market," Novak said. "Right now we can't import any extra diesel. We're paying high prices so that stuff doesn't leave."

Demand for diesel fuel has been growing faster than demand for gasoline, said Greg Nothstein, an energy policy specialist with the state's Department of Community, Trade and Economic Development. And European countries don't export as much diesel as they used to, because they're trying to keep what they can, he said.

Demand for diesel in the U.S. and on the West Coast also has been rising more rapidly than the demand for gasoline.

"There's a lot of freight being moved around," Nothstein said. "We're a big importer of foreign goods."

Nearly all semi-trucks, buses, trains, ships, farm machinery and construction equipment run on diesel engines.

Diesel is a distillate refined from crude oil, but it's also closely related to heating oil and jet fuel.

"During the winter months, demand for heating oil is high and that puts pressure on the diesel market. There's only so much diesel that refiners get from a barrel of oil," Nothstein said.

Another reason for a bump in prices is the rules for cleaner, low-sulfur diesel. The U.S. Environmental Protection Agency passed the requirements in 2006, contributing some to the underlying price of diesel.

More recently, the price of crude oil, which accounts for about two-thirds of a gallon of gasoline and diesel fuel, has pushed prices even higher this year. Crude oil is selling at $2.50 a gallon wholesale, but the refining margin on gasoline is smaller than for diesel, Novak said.

That's because gasoline supplies are at a 14-year record high, while the supply of distillates, including heating oil and diesel fuel, has fallen. Inventories of diesel were 4.7 percent below what they were last year for the week of Feb. 28.

Hope this helps.............Marshall

[Makers Mark]

Thanks Marshall,

It's good to know that in today's world wide, complex economy some of the old basic theories like supply and demand still exist. I did not realize that demand for diesel was higher than gasoline. Again, not thinking globally of the world economy. The way that article explains Europe's switch to diesel as well as the heavy duty shiping needs of this country (trains, trucks, ships) I can see why the demand of diesel is higher.

Regards,
MM

[Mooney]

$4.40 at a Valero station in North Central Rhode Island....

[RPierce]

Went by the local Sunoco tonight on my way to work and I couldnt believe what I saw, $4.95 for Diesel!! Definetally looks like we will be paying $5.00 a gal or better by memorial day.

[Lode]

Anyone make biodiesel? Personally, I've never even seen it at a pump nor burnt it in my truck.( I guess I live to far away from one of Willie's truck stops)

I used to think it was a crazy messy idea but as the price continues to climb I've more recently considered taking the plunge and buying the equipment to make my own fuel. Several different folks I've talked to who make their own fuel have indicated to me that after start up equipment it costs them a little under 1 dollar to make a gallon of fuel... $35 dollar fill up anyone?

Take care,
Jason

[Steve Collins]

Originally Posted by RPierce

Went by the local Sunoco tonight on my way to work and I couldnt believe what I saw, $4.95 for Diesel!! Definetally looks like we will be paying $5.00 a gal or better by memorial day.

$4.59 to $4.79 yesterday here in the Rochester area...

[kanyonkitty]

Guage was on 3/4 tank, but thought I'd top it off

Got 11.11 gallons for $50 bux, OUCH OUCH OUCH

[What6308]

We picked some up for the VW last night at $4.35 (RaceCo), down the street the Citco wanted $4.79. At least it gets good MPG.

[Bobo]

Just fueled up the work truck today

$5.10 per gallon

Thank god that I don't pay the bill.

Bobo

[2beagles]

Filled up on fuel tonight for the wekend trip, and spent $93.00 to fill the tank at $4.75/gal. That was 10 cents/ gal. cheaper than any other place in town.

[MACK C-85]

Never thought I'd think the $4.45 I paid last night at the local Shell Station was a good deal

Shell has Five Cent Thursdays...... $.05 off all fuels on Thursday.

The other thing that is a pain is the $100 cut-off (I know, used to be $75)on the Credit Card, just below a 1/4 on the gauge and almost $109 to fill up.

Before you all get too jealous........the average around here is about $4.65 - $4.70.

[264SRinPA]

I just love the $170 fill ups

[emam]

Luckily some fellow RVers had warned us before we headed towards Death Valley to top off in Pahrump Nevada. I thought "OH MAN! $4.49 a gallon!"

But I now know why they said that. THe cheapest we saw while going through Death Valley was $5.75 for Diesel.

Luckily I still have 18 gallons in the bed in spare fuel cans that I had filled up back in Arizona that has $3.99 diesel in it.

I hate filling up in California. Plan on adding $0.50 to any price you see anywhere else in the US

[Tweety]

$4.58 at the Valero at the Marion exit of I81 on tuesday afternoon. Just saw $4.99 in Carlisle, PA.