Why is Diesel Fuel so Expensive?
It's more than just oil company greed
By Michael Harley
One decade ago, the "cheap" fuel at the pump was diesel. Unfortunately, the diesel cars of that era left a lot to be desired. Today's diesels are a new breed. They are quieter, cleaner, more efficient, and more powerful. But, something else has changed…the skyrocketing cost of diesel fuel. Here's the skinny, simplified:
First, diesel fuel isn't gasoline. In technical terms, it has 10% more BTU (energy) per gallon than gasoline. Diesel fuel is often referred to as "oil" (yes, it is messy) and it is frequently used to heat homes in the winter. Increased winter demand raises prices.
Second, the federal government taxes diesel at a higher rate than gasoline. For example, in Pennsylvania the tax per gallon of fuel is $.31 for gasoline, $.38 for diesel, and a mere $.16 for ethanol. The numbers speak for themselves.
Third, there is a huge worldwide demand for diesel fuels. Not just in North America, but in Europe and Asia too. There just isn't enough capacity right now to meet demand, and as the number of diesel vehicles in North America rapidly increases the problem is only getting worse. Again, too many cars, and too little fuel raises prices.
Fourth, the transition to low-sulfur diesel fuel in the United States is affecting diesel production, and distribution. Low availability means higher prices.
Unfortunately, as you can see from the above list, there isn't a "quick fix" that is going to dump the price of diesel fuel anytime soon. We wish we had better news.