Why does diesel cost more than gas?
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Why does diesel cost more than gas?
You may have noticed that a gallon of diesel fuel costs more than a gallon of gasoline. For many years, diesel fuel prices tended to be lower than gasoline. Since September 2004, this trend has disappeared, with diesel fuel prices tracking or exceeding gasoline. One of the various factors affecting diesel fuel prices is the motor fuel taxes collected at the federal, state and sometimes the local level. Since October 1, 1997, the federal government has imposed 24.4 cents‐per‐gallon tax on diesel fuel compared to an 18.4 cents‐per‐gallon tax on gasoline. Almost every state also levies a diesel tax the average of which is 19 cents per gallon. Some states levy the same tax rate on gasoline and diesel fuel, however 20 states currently tax diesel more than gasoline with 13 states imposing higher gasoline taxes.
On May 20, New Hampshire Gov. Maggie Hassan signed into law legislation indexing the state’s 18 cents/gallon motor fuels taxes to annual inflation. This means that, as of July 1st, motorists fueling up in New Hampshire will pay an additional 4.2 cents/gallon. New Hampshire joins Virginia, Maryland, Pennsylvania, Vermont and Wyoming that have recently increased their state motor fuels tax.
According to the National Conference of State Legislatures, there are 14 other bills pending in 7 other states that would increase state motor fuels taxes.
Read The Top 5 Questions About Diesel Fuel, "The Fuel that Powers America [
http://www.dieselforum.org/files/dmf..._June2013_.pdf ] .
Read more [
http://www.dieselforum.org/files/dmf...egislation.pdf ] about all pending state motor fuels tax legislation.
I had discussions with people at the Diesel Forum a few years ago about the cost disparity between gas and diesel fuel. While taxes are certainly part of it, it's not the biggest reason why diesel fuel costs more.
Yesterday, as we drove past a local fuel station I noted that diesel fuel was an even 50-cents a gallon more than the lowest price unleaded.
The biggest reason - the most important reason - why diesel fuel costs more than gasoline is because diesel fuel is now an export commodity. The U.S. began exporting diesel fuel about the same time as diesel fuel began costing more than gasoline. Most of the world runs on diesel fuel. America, more than any other country, powers its automotive fleet with gasoline, which has a poor export potential.
World markets are wonderful, aren't they? For the first time in 100 years, we are approaching a point where we could become energy independent. The energy companies say we need more exploration and development to help us reach that independence. It also means we'll become a much larger exporter in energy. By "we", I mean the energy companies that are extracting energy from U.S. public lands and waters, not you and I. Will becoming a net producer/exporter of energy mean lower diesel fuel prices for U.S. citizens? No, it won't.
Citizens all across the U.S. are currently celebrating the low cost of natural gas, due to finding and exploiting the vast reserves in new gas. The energy companies are working feverishly to develop technology to economically liquify that gas, so it can be exported. Guess what'll happen to natural gas prices when that happens?
