In the past, diesel was always cheaper than gasoline in Bushkill PA because it was simpler to refine. Since 2004, retail prices for diesel have been higher than those for gasoline, but they fell below that level in 2015 for the first time in years. Below are several reasons why diesel fuel has usually been more expensive than gasoline.
Seasonality
On-road diesel, which is also referred to as #2 distillate, is almost the same as home heating oil. In cold climates where heating oil is in demand, diesel prices usually climb faster than those for gas. Starting every September, the demand for gasoline declines, while diesel demand increases as more is needed for machinery that harvests and transports crops.
Demand From Foreign Markets
Gasoline is dominant in the US motor fuel market, and less than two percent of passenger vehicles use diesel. That means the country’s refinery infrastructure is optimized for the efficient production of gasoline. From a 42-gallon oil barrel, refining provides 18-21 gallons of gas and 10-12 distillate gallons, in addition to other refined products. While yields can be adjusted, refineries must perform extensive upgrades to make more distillate from each barrel. While the US relies mostly on gasoline, other countries rely heavily on diesel fuel to power industrial machinery and passenger vehicles.
Rising Domestic Demand
While it has declined since its peak in 2007, demand for diesel has remained high in the US. Diesel vehicle sales increased by over 25% in 2012, which is double the increase of the overall auto market. Diesel fuel from W.S. Peeney Inc is used in most trains, farm equipment, trucks and buses, and it is increasingly used in passenger cars.
Use of Low-Sulfur Diesel Fuel
Low-sulfur diesel is clean-burning, and according to the EPA, it must have a max sulfur content of 15 ppm (parts per million). It was gradually phased in between 2006 and 2010, and it replaced a higher-sulfur on-highway diesel mixture. Low-sulfur diesel is mandated for use in vehicles made after 2007, which come with high-tech emission controls.
Taxes
The federal government’s tax on diesel is six cents more per gallon than the tax on Gasoline in Bushkill PA. The last federal tax increase happened in the early 90s, back when diesel was almost always cheaper than gasoline. While taxes aren’t a factor in the increase in diesel prices over the past decade, they are part of the reason why they’re higher overall.
