Why diesel fuel is higher priced than gasoline...

[More Power]

We're currently importing 15 million barrels of crude per day. At $130/bbl, this equals about $712 Billion dollars for all of 2008. I seriously doubt the U.S. can continue hemorrhaging that amount of cash for too many more years...

Gasoline supplies on hand have been recently reported to be at a 14 year high. We're exporting a lot of ULSD (which is why diesel costs more than gas). We don't need more refining capacity.

Jim

[16gaSxS]

Jeep;

I agree we need refineries, no new one built in over 30 years.............

Our Governor here in Montana a Democrat suggest during his Election that we build 3-4 new refineries in Montana on the "High Line" along US Rte 2 and near the main line of BNSF Rail Road. Oil could come from both the Montana fields and Canada. He has not said much concerning this, just the Synthetic fuels.

I personally would like to see: Drill Here. Drill Now. Pay Less.

The current Oil situation is self created and those of us who understand the hows and whys have been over ridden by the forces against development. The same time you can't get Synthetic oil plants off the ground with $25-30 oil when break even is $50+. Our economy is in big state of change and with all change there will be winner, losers and WHINERS........ I'll take Swiss with mine please!


A very vocal minority has had a great amount of impact on energy production and Industrial development in this country. We typically go overboard in this country, and do a very poor job on 5-10year+ planning. Good part of it is due to the fact than many people have a attitude of: Hey the house payment or rent is made, there is a 12 pack in the Fridge and there is game on don't bother me about serious stuff.

[TheJDMan]

I don't see why everyone is so surprised by these fuel prices. What do you expect when the President and VP are both big time oil men and their families are well connected within the oil industry? As long as this administration is in office the oil companies will be free to charge anything they like and make all sorts of lame excuses without fear of any real government pressure. I also fail to see why the oil companies should continue to receive 18 billion dollars a year in tax incentives while at the same time reporting hundreds of billions of dollars in profit. It is obvious to me that the oil companies are trying to make as much money as they can now before a new president takes office. I also suspect time will show that this president will go down as one of the worst presidents in US history.

[JeepSJ]

I don't see why everyone is so surprised by these fuel prices. What do you expect when the President and VP are both big time oil men and their families are well connected within the oil industry? As long as this administration is in office the oil companies will be free to charge anything they like and make all sorts of lame excuses without fear of any real government pressure. I also fail to see why the oil companies should continue to receive 18 billion dollars a year in tax incentives while at the same time reporting hundreds of billions of dollars in profit. It is obvious to me that the oil companies are trying to make as much money as they can now before a new president takes office. I also suspect time will show that this president will go down as one of the worst presidents in US history.

Maybe you can explain how the President and his administration are able to control the price of a globally traded commodity? While you are at it, please show how increased consumption by China and India (and a few others) have NOT had an impact on world oil prices?

While you are at it, can you explain the difference between "profit" and "profit margin"? If you have a record sales volume, would you not also expect record profits?

One final thing, can you tell us why Pelosi and her goons have blocked drilling and exploration sites?

[ronniejoe]

I don't see why everyone is so surprised by these fuel prices. What do you expect when the President and VP are both big time oil men and their families are well connected within the oil industry? As long as this administration is in office the oil companies will be free to charge anything they like and make all sorts of lame excuses without fear of any real government pressure. I also fail to see why the oil companies should continue to receive 18 billion dollars a year in tax incentives while at the same time reporting hundreds of billions of dollars in profit. It is obvious to me that the oil companies are trying to make as much money as they can now before a new president takes office. I also suspect time will show that this president will go down as one of the worst presidents in US history.

The looney conspiracy theories never end...

[More Power]

The above three posts have nothing to do with why diesel fuel costs more than gasoline, which is what this thread is about.

Don't go down the political road.

Jim

[Mark Rinker]

If you have a record sales volume, would you not also expect record profits?

In short, not always.

The transportation sector, including tiny company MRE, is experiencing good volume (record gross sales numbers, as prices have risen, following fuel costs) but most - including tiny MRE - are recording lower net profits, as all input costs have also increased as a result (tires, brakes, oil, repairs, insurance, advertising, wages, etc.)

That is the interesting point. The oil companies consume barrels of oil to produce their products. Their main input cost has spiraled, but their profit margins have remained healthy, or they couldn't be posting the record net profit numbers. One can only arrive at the conclusion that they have more demand, and less competition than your average Joe in the transportation sector...like MRE.

As for diesel costing more than gasoline, I have to agree with MP's observation that ULSD is now a world commodity, so we are paying world prices. It also contains more energy per gallon than unleaded, so I guess it makes sense. Not sure how it was so cheap for so many years. Has it historically been higher priced overseas, when compared to unleaded?

[More Power]

This above shows the distillate composition for a barrel of crude oil (a barrel being 42 gallons). We've all heard many times that more diesel fuel (or similar density products) are produced from each barrel. As you can see, there are more gallons of gas per barrel than any other.

[afgunn]

The only positive to these higher fuel prices is that it makes all the alternatives much, much more cost effective. All of this happened in the '80s and a lot of different alternative fuels (Gasohol), tax incentives, rebates, some regulation (55mph - except Montana!), conservation and subsidies were enacted. This was so effective that OPEC dropped the oil prices until it was no longer cost effective to pursue any of the alternatives and/or conservation. I do not believe that this will happen again because of the current and increasing world demand. We cannot "conserve" our way out of the crisis this time. We should learn from past history, that enterprising individuals and not government will solve this present crisis.

It is interesting to me that everytime the fuel prices have gone up they have always settled on an app. 100% increase. For gasoline: .30 to .60 a gallon, then ~ $1.20 a gallon, then ~ $2.40 a gallon and now ~ $4.80 a gallon. Is it what the market will bear!? Don't get me wrong, it is painful for me as well - more than some and less than others. There are some things I will no longer do and others that I will change. I will be burning wood for hear this winter not propane - had it taken out.

My biggest recommendation would be to start or get involved in a bio-diesel co-op. This is one reason I own an older mechanical IDI diesel. My brother raises a few cattle and has a need for diesel fuel for his farm needs. So, with my help and suggestion, we are looking into growing oil seed crops to power our vehicles, heat our homes and feed his few cattle. It is small scale but this is what has really worked so many times in the past when America was in trouble. American's have been very ingenious in the past - I hope we can this time as well. Remember, Victory Gardens for WWII!? I do NOT have DIRECT experience with this! I am not THAT old!

Just wait until heating season comes this fall! There is going to be some REAL pain at the HOME to go with the pain at the PUMP! All of this is a bad, bad situation especially for anyone in a northern climate on a fixed income! It may be disastrous for many! Do you buy fuel, food or heat!? Which can you do without! And they ALL are going up.

Utilities are starting to pass along higher operation costs due to the fuel costs. It is a snowball effect. And our financial and strategic security is at stake! America destroyed, not by any military, but by spiraling fuel costs all while sitting on top of some the largest fuel reserves in the world! Is this to be our history?!

A side note is that cattle, pig and poultry growers have been selling down their herds/flocks to lower their feed costs and this will cause a shortage of beef, poultry and pork. Decrease supply with a fixed demand and what will happen - prices go up. This will be on top of the higher prices due to the higher fuel costs.

And no... I am not optimistic. I am too much of a realist to be optimistic about this.

[ronniejoe]

I'm optimistic! This whole bubble is going to burst and fuel prices are going to plummet. I look for it before the end of the year, but that may be too optimistic. The outrage is growing. The folks standing in the way are about to be bowled over.

[ronniejoe]

It's interesting how President Bush lifted the Executive Moratorium on OCS drilling...and the price of oil dropped. Guess that refutes the primary Democrat talking point that drilling here, drilling now will not affect the price for over a decade. Just imagine what would happen if congress were to get off it's duff and lift their ban on the OCS and ANWR.

This also proves that the "big oil boogey man" isn't the cause of the price run up and takes away another Democrat talking point. Market forces are. The mere possibility that the supply would increase because we get serious about drilling caused the market to tumble.

As I stated in a previous post, the Hydroplate Theory predicts that there will be massive quantities of oil discovered inside the arctic circle. Here's a recent article: http://www.bloomberg.com/apps/news?p...d=aqEDMhrCvp28

I suspect that the estimates in this article for the quantity available are very conservative.

Democrat Congressman Salizar recently sneaked language through in another bill to prohibit the exploration and exploitation of oil shale in Colorado (MP wrote much about this resource in his editorial). Couple this with Ms. Pelosi's declared war against drilling in the OCS and it should be coming clear to the American people that the Democrat party is standing in the way of lowering fuel prices and want you to pay more at the pump.

Furthermore, a recent article that I read revealed that several Democrat Congressman are trying to push through a ten cent per gallon tax increase on both Diesel fuel and gasoline. http://www.washingtonpost.com/wp-dyn...072000279.html So much for the summer tax holiday, huh. Seems our market driven reduction in demand for fuel has cut the amount of revenue taken in from the gas tax. And we all know the government can't do with less... This should be political suicide. If Republicans would get off their duffs and take up the energy issue as their own, they would have a resounding victory in November. Sadly, I don't think they have the cajones to do so.

It's too early to tell for sure, but the optimism that I expressed in the previous post may be rewarded soon as the price of oil keeps falling.

[More Power]

Furthermore, a recent article that I read revealed that several Democrat Congressman are trying to push through a ten cent per gallon tax increase on both Diesel fuel and gasoline.

California, a few years ago raised taxes on gasoline because there was a shift toward more efficient cars, which produced a drop in tax revenues. A sizable percentage of CA's motor fuel tax goes into their general fund - meaning a percentage is not used for highway construction/maintenance.

California recently made it much more difficult for the home-brew SVO/WVO crowd to produce a diesel fuel substitute at home. CA now requires that anyone making/brewing/storing SVO/WVO bio-diesel first buy a $300 commercial fuel permit, obtain a $1M hazard insurance policy, and pay motor fuel taxes on the fuel they produce. The Governator was shocked recently to learn that he owed back taxes on the bio fuels he has burned in his Hummers. What a great state!

You can bet that as the rest of America begins to use less motor fuel, the taxes will go up to maintain the cash cow. I've asked this before, sort of in jest, about what would happen if America shifted toward electric cars...

Like tobacco, the gov really doesn't want America off fossil fuels - no matter how sincerely some in Washington believe in global warming. It's an easy to tax commodity.

Jim

[a5150nut]

You can bet that as the rest of America begins to use less motor fuel, the taxes will go up to maintain the cash cow. I've asked this before, sort of in jest, about what would happen if America shifted toward electric cars...

Like tobacco, the gov really doesn't want America off fossil fuels - no matter how sincerely some in Washington believe in global warming. It's an easy to tax commodity.

Jim

Jim I think you are right about taxing by the gallon. It would be all to easy the tamper with an odometer. And California is the leader on taxation!

[ronniejoe]

California recently made it much more difficult for the home-brew SVO/WVO crowd to produce a diesel fuel substitute at home. CA now requires that anyone making/brewing/storing SVO/WVO bio-diesel first buy a $300 commercial fuel permit, obtain a $1M hazard insurance policy, and pay motor fuel taxes on the fuel they produce. The Governator was shocked recently to learn that he owed back taxes on the bio fuels he has burned in his Hummers. What a great state!

Does anyone seriously believe that this was done for safety? Surely it wasn't done to control or intrude on the lives of private citizens!

California is the poster child for liberalism run amok. I really enjoy visiting parts of that state, but I certainly would not want to live there. In 2003, we spent nearly two weeks in southern and central California (Mt. Whitney, Sequoia/Kings Canyon National Parks, San Francisco for my wife to compete in the Escape from Alcatraz Triathlon, camped on Angel Island after sailing there on my brother-in-laws sail boat, Yosemite National Park among other stops). While at the Whitney Portal campground (yes, I pulled my 32' trailer up there...there were only three sites big enough to accommodate it), my reserve plastic fuel can with five gallons of Diesel in it got eaten by a bear...it was stowed under my trailer. Since we were near the beginning of the trip, I stopped at a hardware store to buy a replacement. I couldn't believe how expensive the jugs were and I couldn't find a vent on them anywhere. Then I realized that they all had some over-engineered automatic valve with automatic vent built into it on the nozzle. I asked the attendant about this and he laughed and said, "You're not from California!" I said, "No." He then explained that state law required these types of nozzles on the gas jugs.

To make a long story short, the thing doesn't poor well because the vent air has to make its way in through a small port in the pooring spout. The spout is spring loaded so that you have to hold it against the fill neck or opening of whatever you are filling (or, cheat and hold it open with one hand while holding the jug with the other and a spare knee). I still use the thing because it was so expensive to purchase. My kids and I call it the "California can" for obvious reasons. I've never seen anything like it anywhere outside of California.

This is a fine example of the effects of unchecked liberalism and an activist government. Something as simple as a fuel can has to be turned into a ridiculous pain in the butt.

[DmaxMaverick]

I have several of those cans. I hate them, but that's all we can get anymore. They are just about worthless for filling a vehicle (or anything, for that matter). Even says so on the label, "not to be used for fueling automobiles", and you can't get one that does. They make a mess filling just about anything. But, some desert trips make it necessary, so I spend more time on cleanup when I get home. Unchecked BS is right, in so many ways. But, it's home, and we're used to the frivolous BS. The homebrew fuel tax is a joke. I don't know anyone who pays it. I'd bet the governator doesn't (or all of it, anyway). The only thing that isn't taxed here is labor, but they even get that in the end.

Anywho....
I live between Sequoia Park and Mt. Whitney. Beautiful country. Too bad it's in Kelliforneea. [did you know Sequoia is the only word in the English language using all 5 vowels, and only once each?]

[Mark Rinker]

Last time I checked, the man in charge out there was a Republican...how frustrating it must feel for all these conservative leaders, cleaning up all the messes left behind by tree-hugging liberals.

Agreed on the gas cans - I had one and tossed it out of pure frustration. More gas was spilled on the ground as a result!!!

[convert2diesel]

Drill hole in the handle above the fuel level and throw out the nozzle. You can get the old style nozzle as a replacement at your local hardware store. Problem solved (would prefer to get old style container then the problem wouldn't exist in the first place).

Bill

[JohnC]

My kids and I call it the "California can" for obvious reasons. I've never seen anything like it anywhere outside of California.

Guess you're not from New York, either...

Good to know I can still get a "real" gas can somewhere...

[ronniejoe]

Last time I checked, the man in charge out there was a Republican...

At the risk of being called a stalker again...

There's more to it than the governator (who's a RINO anyway)...there's that pesky thing called the state legislature that actually makes the laws. Seems that it's overrun with Democrats.

[Mark Rinker]

http://en.wikipedia.org/wiki/Republican_In_Name_Only

"RINOs." "Liberals." "Tree-huggers." "Drive-by media." If nothing else, Ron - you keep me busy studying and understanding the labels used by some people, to classify 'other' people.

Keep 'em coming!