Re: why is diesel so expensive then gas?????

Posted by Bob M on March 01, 2006 at 08:21:34 from (151.190.254.108):

In Reply to: why is diesel so expensive then gas????? posted by all for school on March 01, 2006 at 07:38:28:

It’s a classic example example of free market economics in action.

The cost of producing a commodity (in this case diesel) is only partially responsible for the final price charged to consumers. Rather retail prices settle at whatever the end users are willing to pay. Consequently when demand goes up, so then does the price.

Keep in mind the demand for diesel has skyrocketed in the past 20 years. Just look at the sheer volume of heavy trucks on the interstates today. Add the tens of thousands diesel powered school buses, UPS and FedEx trucks, diesel P/U’s etc which 20 years ago were virtually all gassers. You get the idea…

Further adding to this demand is increasing demand for diesel’s close relatives heating oil and jet fuel. And in our area clean air laws are causing many coal-fired power plants to convert to fuel oil. Also the new low-sulfur emission requirements for road diesel increases production costs. These all conspire to further run up demand, and hence prices.

Bottom line: People are buying more and more of the stuff, and they are willing to pay higher prices for it. So diesel is now more expensive than premium gas. Only if people reduce consumption and buy less (and a LOT less….) will you ever see the price begin to drop.

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Another factor: I don’t know where you live, but here in NY state (our new state motto: “land of taxes”) the revenuers have slapped exceedingly heavy road taxes on all motor fuels, including diesel. The gives us the dubious honor of paying of some of the highest prices for diesel anywhere in the US.

I love my F250 Powerstroke, but I'm driving it less and less on account of the fuel cost (last fillup = $102!)

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