Read my November 20, and November 5, 2011, postings about current diesel prices. It’s bad news, it explains why prices are only going up, and how fracking of natural gas is really for fuel production.
May 3, Diesel fuel prices are higher than gas, at the pump.
In Idaho, as of May 3, most gas stations are selling Diesel for about $4.15 per gallon. The highest is $4.50 near Mountain Home. That’s way higher than gas. Most gas stations are selling gasoline around $3.65 per gallon, with the highest at $4.00 near Hailey, Idaho.
Yet Diesel futures are selling for less than gas futures on the commodities market. As of May 2, gas futures, for June delivery, were at $3.34 per gallon. Compare that to Diesel NY at $3.29, and Diesel Gulf at $3.31 per gallon.
So why is Diesel so much higher at the pump?
Many websites say it’s because Diesel must be refined to low sulfur standards. That doesn’t explain the higher price at the pump! The commodity prices paid are for already refined Diesel, so the claim that low sulfur refining is the cause doesn’t work.
Some people say it’s because Diesel is actually in higher demand than gasoline, due to industry (like trucking & airlines, “jet” fuel is actually a form of Diesel/Kerosene) and the military (possibly the biggest user of Diesel, thank the War on Terror). That might be, but normally the commodity price reflects anticipated demand.
Some journalists have asked oil executives about fuel costs, but oil executives can only talk about the price of refined fuels sold on the commodities market, not at the pump.
What about taxes? It turns out that taxes for Diesel are more than taxes for gasoline. In Idaho the average (January 2011) pump tax (combined state/federal) for Diesel is 49.4 cents per gallon. For gas, in Idaho, it’s 43.4 cents. That’s only a 6 cents per gallon difference, so that doesn’t explain the 50 cent per gallon difference in the pump price of Diesel vs gasoline ($4.15 for Diesel minus $3.65 for gas).
By the way, California has the highest tax rates in the country for Diesel at 76 cents per gallon, and gas at 66.1 cents. That’s because California has higher local and state taxes on top of the federal taxes.
So, the only conclusion I can come up with is that Diesel fuel prices, at the pump, are higher than gasoline due to higher taxes for Diesel, and maybe higher demand for Diesel (again that’s usually what drives commodity prices, before it gets to the pump). Maybe gas stations are trying to make up for their extremely slim profit margins on gas prices by jacking up the more stable Diesel prices?