Posted on 12/11/2014 6:17:48 AM PST by thackney
Over the last few months motorists have enjoyed the steepest drops in gasoline prices since the collapse of the world financial markets in 2008. And Texans could soon be enjoying $2-a-gallon gasoline.
But for the truckers who move food and televisions back and forth across the nation’s highways, the news has hardly been so bright.
“We haven’t seen that same price discount. And now we’re entering into the winter. The competition with heating oil, you never know how that impacts diesel,” said John Esparza, president of the Texas Trucking Association. “Come springtime it’s going to be interesting to see if diesel prices have fallen at all.”
Since early July, when world oil prices began their dramatic plunge, diesel prices on average have decreased only 40 cents, to around $3.40 a gallon in Texas. Compare that with gasoline, which had already been running at a discount to diesel and has fallen by a dollar a gallon on average.
That works out to a rate of decline three times what diesel has seen.
Why isn’t diesel falling as fast as gasoline? The reasons are complicated and numerous, part of a web of supply and demand that stretches from oil wells to shipping lanes to refineries to the gas station at the end of the road.
“Think of it as the solar system of oil. Crude is in the middle and these different fuels rotate around it. But these are very elliptical orbits,” said Tom Kloza, head analyst at the Oil Price Information Service.
Seasonal factors
Some of it is the normal seasonal shift in demand and refinery activity.
Just as gasoline prices tend to rise in the summertime — when 90- or 100-degree heat necessitates some changes in chemistry — diesel tends to get more expensive in winter....
(Excerpt) Read more at dallasnews.com ...
I remember when diesel was much cheaper than gasoline. That is why so many people switched over back in the 70s.
This article is unsatisfying arm waving.
Then the EPA mandated the Ultra-Low Sulfur Diesel requirements, raising the refining costs.
But don't worry, it will like be cheaper than gasoline in a few years. The EPA is trying to apply similar requirements to gasoline, so the cost of gasoline will rise up as well.
Yeah, I have not found the numbers type of discussion I’ve been searching for for the last couple weeks on this topic.
More and more truck fleets are starting to convert to CNG.
I respect your opinion on this. Why is diesel 30% more than gasoline? I also remember in the 70’s when diesel was half the price of gasoline. Is there really that much tweaking room to increase gasoline gallons per barrel?
Was diesel that much cheaper? I can’t find a good chart showing at the pump diesel prices back then.
As the owner of a TDI vehicle, I have definitely noticed this discrepancy. Whenever the media trumpeted a picture of a gas drop, if there was a diesel price, it was far closer to the national average of diesel. Still the prices I am paying here in mid-Florida have now dropped below the price I paid 4 years ago, a very pleasant gift to my wallet. Another fact noticed in those 4 years is in times of sudden gas cost spikes like Southern California about a year ago (?) when even regular gas was above diesel.
Just some personal observations.
I remember .17 per gallon diesel. On a trip to Andros in 1962 we tanked up straight off the truck for .11 a gallon.
I have a question.
I thought a barrel of crude oil contained X gallons of gasoline, Y gallons of Diesel, Z gallons of heating oil and numerous other hydrocarbons like motor oil, heavy fuel oil, asphalt, etc.
Why does the season make any difference? If a refiner distills the crude in summer or winter doesn’t the oil produce the same amounts of each chemical?
What am I missing?.................
I am of the opinion that there will not be a drastic drop in diesel prices until three things happen:
1) EPA pollution regulations are adjusted to a per mile basis. This will favor the adoption of diesel over gasoline.
2) EPA regulations require engines to support at least a 50/50 blend of bio diesel / diesel. This will favor the use of bio diesel
3) Significant increase in the production of bio-diesel is encouraged by the dept of Agriculture (farmers using bio algae to produce bio diesel). This will increase the supply of bio diesel.
All three require regulatory changes that I am NOT comfortable with as I do not believe that the government should be in the business of choosing who wins and who loses in the economic game.
US refineries add additional processing to maximize the gasoline production. It changes a few percentage points of the amount of gasoline produced, typically after spend nearly a billion dollars at a larger refinery.
The EPA then mandates changes to the mixture creating gasoline and diesel from summer to winter, so the product the refinery makes has to change each swing season.
You are assuming an equal treatment between different fuels. That is not reality. Gasoline is taxed less than diesel, while CNG/LNG receives no excise tax at all.
2) EPA regulations require engines to support at least a 50/50 blend of bio diesel / diesel. This will favor the use of bio diesel
That will raise prices, not lower them, and some biofuel content is already in government regulations.
3) Significant increase in the production of bio-diesel is encouraged by the dept of Agriculture (farmers using bio algae to produce bio diesel). This will increase the supply of bio diesel.
More subsidy by tax payers of selected fuels? NO!!!
The government should not be selecting the winners and looser and they certainly should not be spending tax dollars to do so.
All three require regulatory changes that I am NOT comfortable with as I do not believe that the government should be in the business of choosing who wins and who loses in the economic game.
Ahhh... We agree. Cheers!
Speaking VERY broadly, if the refiners sets the refinery to utilise more 'cracking', he obtains somewhat more gasoline. Equally, if he sets the refinery to more distillation, he obtains more #2 oil (essentially heating oil/diesel).
There are other variables in play, of course, regarding aromatics, bunker fuel, and so forth. And, quite naturally, the characteristics of the crude that is input into the refinery control to a great degree just how much of 'whatever' product can be produced.
Hack, I know this is wildly oversimplified. If there are any obvious errors, I apologise (and pls correct them). If you have a link to a site "Basics of Crude Refining" or some such, pls post it.
Thanks, and FReegards!
Algae based bio-diesel has zero sulfur. Had the EPA truly been motivated by wanting to reduce emissions, they would have worked to increase bio-diesel production. One possible example: Linking the amount of money eligible to be paid under the CRP (crop reduction program) to the number of barrels of bio-diesel produced on the farm.
The net effect of such a program would be to allow small farmers to be more independent by producing their own fuel, and it would have significantly increased the amount of bio diesel available to the market.
However, that was NOT the EPA’s goal. Their goal is to implement controls over the population and implement as much of Agenda 21 as possible.
It is not as “fixed” as a hard ratio. Refineries can alter how they crack the crude to achieve different ratios. Further, some seasons (winter in particular) require oxygenated fuels in some states. Thus, a custom blend has to be created to meet that market.
The justification for this legislative requirement is reduction in emissions.
But a reasonable short overview.
If you have a link to a site "Basics of Crude Refining" or some such, pls post it.
The following isn't short, but it is written for those outside the industry and not requiring a degree in engineering or the like.
http://www.theicct.org/sites/default/files/publications/ICCT05_Refining_Tutorial_FINAL_R1.pdf
Short related topics:
Due to the cost, we are thankful they didn't. Please, no government selection of which industry should thrive or fail.
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