Global Demand and Diesel Prices

January 27, 2012

We have had many questions come in to the PumpTalk blog regarding diesel pricing and why they continue to be above gasoline prices. In this week’s post, we’ll help answer these questions.
First, I’d like to remind everyone that diesel has more than one use versus its sister, gasoline, whose primary use is transportation. This means that, unlike gasoline, demand for diesel is based on more than vehicle population. Diesel has many other uses in industries like in freight, construction, agriculture and ports.

Now let’s shed some light on pricing.

Demand for diesel has been on the rise since 2008 due to worldwide growth, especially in places like Europe and China. Tighter supply here at home due to greater demand abroad is a factor in why we are paying more. It’s important to note that although gasoline and diesel are both produced from crude oil, they are separate products and prices fluctuate based on their individual supply and demand. Understanding this can help, as we reminisce about when diesel prices fell below gasoline prices.

Interestingly enough, we have a post from 2008 which discusses the rise in diesel prices – and the reasons still hold true!

Along with an increase in global demand, Canada moved to selling only Ultra Low Sulphur Diesel (ULSD) in 2010 for all on-road and off-road diesel fuel (with the exception of rail and marine applications). ULSD is a much cleaner burning diesel. However, production costs are higher than regular diesel. This also plays a part in increased diesel prices.

We have a great post on how diesel has changed in the last 30 years here and how the move to Ultra Low Sulphur Diesel is having a positive impact for consumers.

So to sum it up, diesel prices have maintained their position above gasoline prices due to global demand and the shift to Ultra Low Sulphur Diesel (ULSD).
We hope this helps in answering your questions.

You can also learn more about ULSD on our website.

To learn more about diesel fuel visit you can also visit the below links: http://en.wikipedia.org/wiki/Diesel_fuel
http://en.wikipedia.org/wiki/Diesel_engine
http://www.ehow.com/facts_5089844_diesel-fuel-used.html

- Julie S.

Posted at 12:15 PM in Gas Pricing, Great Links | Permalink | Comments (2)

Comments

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Not sure you answered the question on the rise of diesel suffiecently. Low sulfer diesel has been around for a few years and has always been priced below gasoline until sept/oct of 2011. If we want to lower our carbon footprint then we need more people driving clean buring diesels as they do in every part of the world except north america.

Posted by: dave santi | January 29, 2012 at 08:33 AM

Gasoline accounts for a little over half of every barrel of oil that the US consumes. But despite gasoline’s importance to the oil market–and US consumers’ wallets–rapid growth in consumption of distillate fuel has driven US oil demand over the past few months.

Posted by: Iphone Developer Nyc | March 12, 2012 at 08:12 AM