What_Effects_Diesel_Gas_Prices

What Effects Diesel Gas Prices?
Historically, diesel fuel prices have been lower then regular gasoline. This is no longer the case. Today, diesel prices hover above regular gasoline. This has been the case for the past 5 years or so. There are several reasons for this.
The demand for diesel fuel all over the world has significantly increased. As the demand has increased so have the prices. Diesel fuel is in demand not only in the United States but also in Europe and in China.
In 2006, the United States made more of a commitment to the use of Ultra low sulfur diesel fuel, which is a cleaner fuel. This has affect the costs of producing diesel fuel and also the costs of distribution. The Federal taxes on diesel fuel are also higher then on gasoline which causes the prices to be higher.
The price of diesel fuel is made of several components. They include taxes, marketing and distribution, refinery costs, and the price of crude oil. Today, the average price of diesel fuel around the United States, is $4.43 per gallon.
Below, we will discuss some of the primary factors which determine diesel fuel prices:
Crude Oil: The price of crude oil, along with available supply will have a major effect on diesel fuel prices. The price of crude oil will raise or lower depending on the demand for it. Burgeoning demand has placed strain the available supply which raises prices for the consumer. When there is only so much of something available and an increasing number people want it, they will have to be willing to pay a premium for it. Diesel fuel is not different. OPEC (Organization of Petroleum Exporting Countries) has a major role in determining the price of crude oil. This is because they determine how much oil will be produced by it?s members. The members of OPEC are responsible for nearly 40% of the world?s sources of crude oil.
Refining Capacity: The refining capabilities of diesel fuel are tight. Refineries in the United States are running about 90% capacity. Some other countries use a greater percentage then this. With so many countries close to their capacities and the demand increasing, users will have to pay more for the limited supply.
Imbalance Between Demand and Supply: Diesel fuels are very volatile because the United States is so dependent on it. When its? demand can not be satisfied, goods can not be shipped and prices will increase for all goods, including diesel fuel.
Transportation Costs: Parts of the country which are further away from the Gulf Coast tend to have higher diesel prices because of the added transportation costs.
There are many different components which go into how much consumers will pay for diesel fuel. The primary ones include the price of crude oil, the refining capacity in a particular area, whether or not there is an imbalance between demand and supply and transportation costs. If there is a dip in refinery capacity in a certain part of the country, diesel fuel must be shipped in. This will result in increased prices at the pump. The transportation costs to bring in the fuel and the lower supply will cause the price to shoot up.