The total expense of the combined aspects involved in the production and delivery of diesel fuel to consumers is a combination of the current price per barrel of crude oil, refinery processing, marketing and transportation costs, and ultimately, the overhead expenses of operating a gas station operation. The retail pump price is the total sum of these costs and the profits (and occassionally losses) of the processors, marketing people, distributors, and gas station owners. The proportionate percent of these various aspects and expenses to the retail price is in constant flux over time and across the different regions of the country. The price on the pump also includes Federal, State, and local taxes. Two years ago, the Federal portion alone was 24.4 cents per gallon and the States averaged averaged about 21.8 cents per gallon. Some States and county and city governments levy additional taxes. The retail price is also influenced by local market fluctuations and factors such as the location and the marketing strategy of the gasoline station owner. Some retail outlets are property of refiners, while others are independent businesses that purchase diesel fuel for resale to the public.
So, why are diesel fuel prices are consistently higher than gasoline prices?
Until several years ago, the average price of diesel fuel was somewhat lower than the average price of gasoline. In some cold regions when there was a higher demand for distillate for use in home heating, the price of diesel fuel would occasionally surpass the gasoline price. In the last four years, though, the price of diesel fuel at most locations has been typically higher than the price at the pump for regular gasoline all year round due to different factors. Worldwide demand for diesel fuel has been incrementally rising, with especially greater demand in China, Europe, and the United States, putting more pressure on the tight global refining capacity. In the U.S., the movement towards low-sulfur diesel fuel has had an impact diesel fuel manufacture and distribution costs. Also, the Federal excise tax on diesel fuel is 6 cents higher per gallon than the one they levy on gasoline.
So the question becomes… when you have so many people and industries and different levels of government adding on costs, raising the overall cost to the consumer, how can a man or woman hope to pay less to operate their automobiles?
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