Diesel Prices out of kilter?
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Originally Posted By: andyd
Yah If i could heat my house with regular gas. it would be cheaper than heating oil.
Maybe not. Diesel (and heating oil) has more BTU per gallon than gasoline.
Yah If i could heat my house with regular gas. it would be cheaper than heating oil.
Maybe not. Diesel (and heating oil) has more BTU per gallon than gasoline.
Originally Posted By: kschachn
It forever amazes me to read how oil and refined goods prices are a "conspiracy" or "gouging" or whatever. It is -never- that from a producer or refiner standpoint. Speculators in the market drive up prices for crude on their daily whim but after that it is all driven by the market (as influenced by regulatory interference of course).
Yes indeedy. John--Las Vegas
It forever amazes me to read how oil and refined goods prices are a "conspiracy" or "gouging" or whatever. It is -never- that from a producer or refiner standpoint. Speculators in the market drive up prices for crude on their daily whim but after that it is all driven by the market (as influenced by regulatory interference of course).
Yes indeedy. John--Las Vegas
Diesel is up to $4.45 here in Colville, Wa. My neighbor has a small fleet of log trucks. $4.50 is where he parks them and it becomes unprofitable to run them.
If it were true they are out soak the traveling consumers, why would diesel be near its highs while gasoline is declining and is the lowest its been months?
Diesel demand is much more inelastic - consumption tends to remain much more consistent regardless of price, while gasoline is more elastic and demand responds more to price.
Diesel demand is much more inelastic - consumption tends to remain much more consistent regardless of price, while gasoline is more elastic and demand responds more to price.
Today I passed a station here in Milwaukee where regular unleaded was $3.18/gal and diesel was $4.19/gal. So for some stations at least it has breached the $1/gal spread.
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Originally Posted By: MNgopher
Diesel demand is much more inelastic - consumption tends to remain much more consistent regardless of price, while gasoline is more elastic and demand responds more to price.
Agreed. I can park my car and walk or take transit or even a taxi. The big rigs don't have a lot of choice.
Diesel demand is much more inelastic - consumption tends to remain much more consistent regardless of price, while gasoline is more elastic and demand responds more to price.
Agreed. I can park my car and walk or take transit or even a taxi. The big rigs don't have a lot of choice.
Originally Posted By: Trajan
http://www.eia.gov/oog/info/gdu/gasdiesel.asp
http://blogs.cars.com/kickingtires/2008/05/why-is-diesel-m.html
http://en.allexperts.com/q/Oil-Gas-3147/Gallon-gas.htm
One 42gal gallon barrel of crude oil yields:
19.5 gallons of gasoline
9.2 gallons of distillate fuel oil (diesel fuel and home-heating oil)
4.1 gallons of kerosene-type jet fuel
2.3 gallons of residual fuel oil (used in industry and marine transportation and for election power generation)
1.9 gallons liquefied refinery gases
1.9 gallons still gas
1.8 gallons coke
1.3 gallons asphalt and road oil
1.2 gallons petrochemical feedstock
0.5 gallons lubricants
0.2 gallons kerosene
0.3 gallons other
The main reason that diesel prices are high is the European Union has taxed gasoline more than diesel in a misguided attempted to get people there to buy diesel cars and reduce so-called global warming emissions of carbon.
So to meet this increased demand for diesel the Europeans are importing diesel from the US and exporting gasoline that they no longer need. (It is very expensive to ship product back and forth and this creates more carbon emissions, but that is another topic) This forces the price of diesel up inducing refineries to make more of the stuff. As you can see above they have to make 2 gallons of gasoline for every gallon of diesel, regardless of whether the market needs it. But demand for gasoline is not increasing, so they have to lower the price to get rid of the stuff and induce Americans to buy bigger vehicles.
This is a beneficial situation for the American consumer. Wholesale diesel prices are now $124 per barrel. Wholesale gasoline is $111 per barrel, about the same price as gulf coast oil. Gulf Coast refineries are essentially giving away gasoline at cost to make profits on diesel sales. If we stopped exports of diesel, the price of that product would fall, but the refineries would have to increase the price of gasoline to avoid operating at a loss.
http://www.eia.gov/oog/info/gdu/gasdiesel.asp
http://blogs.cars.com/kickingtires/2008/05/why-is-diesel-m.html
http://en.allexperts.com/q/Oil-Gas-3147/Gallon-gas.htm
One 42gal gallon barrel of crude oil yields:
19.5 gallons of gasoline
9.2 gallons of distillate fuel oil (diesel fuel and home-heating oil)
4.1 gallons of kerosene-type jet fuel
2.3 gallons of residual fuel oil (used in industry and marine transportation and for election power generation)
1.9 gallons liquefied refinery gases
1.9 gallons still gas
1.8 gallons coke
1.3 gallons asphalt and road oil
1.2 gallons petrochemical feedstock
0.5 gallons lubricants
0.2 gallons kerosene
0.3 gallons other
The main reason that diesel prices are high is the European Union has taxed gasoline more than diesel in a misguided attempted to get people there to buy diesel cars and reduce so-called global warming emissions of carbon.
So to meet this increased demand for diesel the Europeans are importing diesel from the US and exporting gasoline that they no longer need. (It is very expensive to ship product back and forth and this creates more carbon emissions, but that is another topic) This forces the price of diesel up inducing refineries to make more of the stuff. As you can see above they have to make 2 gallons of gasoline for every gallon of diesel, regardless of whether the market needs it. But demand for gasoline is not increasing, so they have to lower the price to get rid of the stuff and induce Americans to buy bigger vehicles.
This is a beneficial situation for the American consumer. Wholesale diesel prices are now $124 per barrel. Wholesale gasoline is $111 per barrel, about the same price as gulf coast oil. Gulf Coast refineries are essentially giving away gasoline at cost to make profits on diesel sales. If we stopped exports of diesel, the price of that product would fall, but the refineries would have to increase the price of gasoline to avoid operating at a loss.
Hey Burt -
It looks like the oil companies are squeezing every part out of that barrel of oil!
Kinda like Native American Indians who used every part of a bison/buffalo - no waste!
It looks like the oil companies are squeezing every part out of that barrel of oil!
Kinda like Native American Indians who used every part of a bison/buffalo - no waste!
Originally Posted By: mechtech2
Hey Burt -
It looks like the oil companies are squeezing every part out of that barrel of oil!
Kinda like Native American Indians who used every part of a bison/buffalo - no waste!
No different than the local butcher who carves up a beef carcass with the idea of selling the pieces for more than he paid for it. The butcher makes the most on selling the steak and sells the lesser parts at a loss, but on average he comes out ok.
Hey Burt -
It looks like the oil companies are squeezing every part out of that barrel of oil!
Kinda like Native American Indians who used every part of a bison/buffalo - no waste!
No different than the local butcher who carves up a beef carcass with the idea of selling the pieces for more than he paid for it. The butcher makes the most on selling the steak and sells the lesser parts at a loss, but on average he comes out ok.
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