Why are fuel companies charging more for diesel than for Gasoline when it is so much cheaper to make?

Best Answer

High diesel prices are annoying me as I bought a car that runs on diesel 2 years ago. It is complicated but basically (like everything else in economics) boils down to supply and demand. The last few years diesel has been higher than gasoline, but this is the first time in history that has happened. Here are some key factors in play right now:

1. New ultra-low sulfur diesel rules have made it harder and more expensive to process diesel.

2. The Northeast uses fuel oil for a lot of heating in the winter. Diesel production gets shifted partially into fuel oil production resulting in a smaller supply of diesel in the winter and early spring.

3. Diesel cars are becoming more popular in the United States.

4. Increased demand for all oil products including diesel in China.

5. Europe uses a lot of diesel in their cars and trucks. They therefore have an excess supply of gasoline from their refineries that they are shipping to the United States. This increases the supply of gasoline without affecting the supply of diesel, thus helping to create a difference in price between the two.

6. You say diesel is easier to make than gasoline. That really just isn%26#039;t true for most of the crude oils we are processing.


As to the person who%26#039;s answer talks about Canada selling gasoline to the US and then buying it back... I think you%26#039;re missing something. It may be that Canada is exporting crude oil to the US (and there are several US refineries that process a lot of Canadian crudes) and then buy the gasoline that they produce. This would be due to Canada not having enough refining capacity to process all of that crude. I%26#039;m just guessing, but I think this is what you are talking about. Chemical Engineer and diesel driver

Asker's Rating:

%26quot;you dont say?....%26quot;

Other Answers (5)

• Because the head of our government is a moron and could care less what the average joe has to pay for anything. His fingers are in big business and oil and he has padded away huge amounts of money and has no need to be concerned about the people. Cheney probably runs more policy than Bush. Bush and Cheney are locked into big business like selling out our nation%26#039;s security to the Arabs. Look at Bush.....he hasn%26#039;t a clue whats going on and could care less.
• I%26#039;ve been wondering the same thing for a while now.
  Also I%26#039;ve been trying to figure out why we in Canada are selling our gas to the US, then buying it back? It%26#039;s costing much more, and the US is making the profit! Even though it%26#039;s coming from here..?
• Because price is determined by supply and demand, not cost of production (well, that does determine a lower floor for prices). Fuel prices have also been driven up by speculation in the futures market. It is like a replacement for the real estate market.
• This is just an opinion,
  
  because in the years before not many people cared about global warming so the companies made less of it but charged more to keep it available to the people.
  and so since it costs more than gasoline people don%26#039;t buy and pretend since they are only one person it wont make a difference to hide away the guilt.... or they don%26#039;t believe in it.
• Diesel is cheaper in Inida to petrol, about 40% less in cost