What's Up With Diesel Prices Going Down?

Could be the oil producers finally figured out that when comparing the new emissions compliant diesels to the new higher efficiency gasoline burners the gas burners have a better cost per mile for ownership now thus making the demand for their product even lower now.

My 1 cent reply is that it probably has to do with

supply and demand. More diesel is available and storage becomes more saturated.

Many households don't need diesel now for heating. The same trend as where I lived and live now.

Global Warming......the demand for heating oil has gone down and refiners are diverting to diesel....creating a supply glut....then you have all that bio-diesel being produced....and natural gas has captured the small electric generation market....or more trains less trucks...

That is a good response,.... it just like natural gas supplies, it depends on what the requirement and demand is. '

when there is a high demand that coincide for high as well as fertilizer production..... prices increase.

as far as tcmtech explanation that the costs are coming are in line that its cheaper to run a gasoline ice than a diesel ....... the change from diesel to gas power just does not happen quickly.

Thanks phoenix. Unfortunately everything we eat, drink, touch or use is touched by diesel in one way or another and Wall Street knows this and capitalizes on it. It really pi$$es me off the game the oil companies and Wall Street play with fuel prices. So if they take in the shorts once in awhile, it doesn't hurt my feelings at all The only other item that compares to our diesel dependency I can think of at the moment is Rare Earth materials and China's strangle hold they have on it. Capitalization at it's finest!

insider trading as well as the politics in this country is ridicules, like a third world country.

Where you get elected to office and with nothing to your name (bank account) and make a career out of it, while living a good life and retire a multi-millionaire.

It is not just the big players. I live very close to small refineries in NW Pa that do refine to gasoline and sell it in this area. It has always ticked me off that I could go back to where I grew up in south central Pa, at least 180 miles from the nearest refinery and buy gasoline at $0.20 to as much as $0.40 cheaper per gallon. Explain that to me.

There isn't some guy in a shiny suit in a corner office someplace that sets gasoline prices at the corner gas station. Independent gas stations are in the business of purchasing fuels at the wholesale price and sell it at the retail price. If that margin is good they make money. If not, they struggle. They obviously mark it up as much as possible. I know I would. Competition dictates the price. They can't just set it at $10/gallon and get rich quick. They try to cover their operating costs and hopefully make a fair profit.

I live less than 50 miles from the largest refineries on the west coast, but pay $1.00 per gallon more than the national average.

The Monopoly game needs to be revised to include the three major oil companies. Screw buying Hotels, nobody can afford renting space when their bankrupted from landing on the Oil Companies!

California is a good example of the effects over-regulation. It's next to impossible to build a new refinery, dam, or power plant in this once-great state.

If the demand for energy rises in an area such as California, but competition is stifled from coming in to meet the increased demand, prices will certainly rise.

I lived in a small coastal town in Oz with a large jetty facility for loading various commodities.

Occassionally a small fishing fleet would come in to unload live tuna straight onto a plane and on to Japan.

If you wanted fresh fish you had to catch it yourself. Local business was not worth opening the hold doors for.

The crews of these fleets were very welcome at the pub. Daughters were locked up at home.

I can well believe that you have squarely hit the nail on the head.....thanks.

Furthermore, other than trucks and Locomotives in the USA generally, it was never really a Diesel car "country" either to my mind at least......

Here in Germany, I forget exactly when, some 15 years or so ago maybe, the percentage of Diesel cars to petrol went over the 50% line (just from memory only!).

http://www.popularmechanics.com/cars/a4567/4330313/

There are several reasons why I believe:-

1) Far better MPG than an equivalent petrol car. Especially interesting for people who drive a lot for business and/or pleasure.....

2) Simpler design of engine, built to last (generally heavier), no High Voltage components needed for example, simpler ECU, this means that a) the cars go wrong less often b) the problems if they come are generally better understood by a reasonable mechanic and therefore fixed better/sooner.

3) Provided oil/filter changes are kept to, with high quality, generally LL3 oil nowadays, engines can live far longer, which is attractive for people who want a car to last well....we often see cars here with between 500,000 and 1,000,000 Kms.....and still running!!! The state/life of the bodywork is then the deciding factor for the German TÜV!!

4) Safety, because Diesel is far less likely to catch fire in an accident than petrol....

The Diesel car fraternity in the USA is relatively quite small I believe, but how small I do not have a clue....I am sure that someone here will know far better than I....

Its interesting to say, about 10 years ago, when I was looking for a new truck the price of a diesel engine over a gas engine was $3,000.00-$3,5000.00 adder.

I felt that this price was based solely on demand.

Blame it on the NASCAR mentality. If NASCAR raced diesel engines, the diesel cars would sell like hotcakes in the USA. Most American males, at least those 40 years old or more, were indoctrinated in their public school days with the belief that diesel engines were only for trucks, because they couldn't be raced. Logic doesn't matter much when you have been brainwashed at such an early age into believing an engine type is fit only for grunt service.

Yeah - I know it doesn't matter how fast a car can go on a public highway, but that stigma attached to diesels over rides the logic of the better mileage. And in reality, the better mileage doesn't matter that much with the disparity in cost/gallon of the two fuels in the USA.

Most American males, at least those 40 years old or more, were indoctrinated in their public school days with the belief that diesel engines were only for trucks, because they couldn't be raced.

That's not true,.... most American males understand that NASCAR actually improves innovation. if they went diesel that alone may drive the price down of the motors, (but create a demand for diesel)

At least the educated ones.....

I grew up in the center of short track racing in the 1960's, and, yes, it is true. Every thing we read about racing was based on the pushrod gasoline fed carbureted V8. Everyone we talked to said diesels were for trucks. They had a ton of torque but couldn't accelerate fast enough to get out of the way of an angry stampeding porcupine. Diesels were considered too slow on acceleration for racing, so, who would want them in their street car?

Now the post you are responding to was a response to a fellow who is situated in the heart of Formula 1 country, wondering why we didn't embrace diesels in the USA. Do you really want to compare NASCAR innovation to what they do? Our racing technology is decades behind what they do, and has been for years. NASCAR tries to control innovations for the sake of cost control to keep as many competitive teams as possible. Formula 1 tends to let them run free and you often end up with one team being dominant. But, their cars are technological wonders.

They had a ton of torque but couldn't accelerate fast enough to get out of the way of an angry stampeding porcupine. Diesels were considered too slow on acceleration for racing, so, who would want them in their street car?

you mean like using Restrictor plates that they're now currently using.

Formula one, when there are basically no limits,..... the technology is widespread..... from the aerodynamics to were it meets the road.... right to the fuel injection...... or what ever they use.....

http://video.cnbc.com/gallery/?video=3000188858 because of major supplies now

Maybe to help influence wholesale conversion from gasoline to diesel? I have noticed a very significant increase in highly efficient (TDI) diesel vehicles and other diesel driven equipment being offered by several manufacturers from all parts of the continent. I was sitting at a stoplight the other day in Mesa and a new 560D Series Mercedes sedan pulled up beside me. It was so quiet that I did not know it was a diesel until he passed me and I noticed the decal on the back of the car. My car is pushing 260HP and he did not have any trouble merging onto 60 with me hard pressed to stay up with him. WOW! What a car! It is the largest sedan Mercedes produces and it is rated at +30MPG highway.

Oil refiners convert worthless crude oil into a variety of products that make your life a lot more pleasant. Take a few minutes and consider the enormous investment in technology and equipment that's required to accomplish this amazing feat. They manage to squeeze as much value as possible out of every drop of crude oil. There's some tweaking possible to shift the split between gasoline and diesel fuel, but not much. During the past 50 years, they have developed better and better methods to safely crack large (useless) hydrocarbon molecules into smaller ones and to recombine them to dramatically increase the overall yields of gasoline and diesel fuels. It took a hell of a lot of hard work, ingenuity and money. This isn't child's play. The price of fuels is ultimately dictated by downstream supply, demand and taxes. Sometimes these evil oil companies make a reasonable profit, sometimes not. It's an extremely competitive marketplace.

If you want to demonize someone for the high price of fuels, you will find that the various levels of government siphon off more of your hard-earned dollars at the pump than the evil oil companies.

I hate to refute your central premise of 'taxes are why gas is expensive,' but here's a site you might want to visit:

http://www.theatlantic.com/business/archive/2011/05/gas-prices-around-the-world-cheaper-than-water-i-and-i-10-a-gallon/238226/

Here's the chart from that page, showing total gas prices (red) and gas taxes (blue). The difference between the lines is the 'pre-tax' price for the gas.

So, for much of Europe, the taxes are 50% or more of the total bill, but in the US, demonizing government for high gas prices is a smoke screen to shift blame away from the oil companies, who are the ones REALLY in control of gas prices in North America.

Oil companies drill deep holes in the ground, pull crude oil out of these holes, and transport it to the refineries where they efficiently transform it from stinky, hazardous gunk into highly refined fuels. The cost of these fuels are basically the sum total of all the costs that goes into doing this, which include paying taxes and adhering to regulations every step of the way. These evil companies operate in a competitive marketplace. They are trying to make a profit, much of which is re-invested in new equipment. The price of fuels is dictated by relative supply & demand (and taxes).

Somewhere along the way, profit became a dirty word. If there was no profit motive, people wouldn't invest their hard-earned money in pizza shops, hardware stores and dry cleaners. The businesses that do a good job of meeting the needs of consumers earn a profit. They are able to re-invest these earnings and grow. The ones that don't effectively meet the need of consumers must improve or they will eventually go by the wayside. When business compete for your hard-earned dollars, consumers benefit.

Your charts certainly reveal why foreign fuel prices are so much higher than ours.

I concede that there are fixed costs involved in bringing crude oil to market.

I think that you will concede that there are wild swings in the price at the pump that are at least in part the result of supply and demand and some price collusion and maybe even fixing.

I worked for a small subsidiary of Total for 8 years.

I'm sure they try to fix prices whenever they can and I'm equally sure they probably succeed for short time periods. The whole concept of OPEC was to try to control crude oil prices. When they were successful at pushing prices above some threshold, a number of dormant oil wells became profitable. There was also an added incentive to develop technology to make oil recovery from these wells more efficient. In an unhampered free market, healthy competition prevents artificial shortages and accompanying high prices from lasting very long. In places where there isn't much competition (e.g., small towns, etc.) cooperation among competitors (i.e., price-fixing) is probably not unusual. One of the beautiful features of a free-market is that when prices rise artificially, there is a greater opportunity for higher profits, so more competition rapidly and efficiently fills the void. (Adam Smith's invisible hand.) Government intervention, while generally well-intended (but not always), generally has the unintended consequence of stifling this natural process. If over-regulation prevents new pizza shops, gas stations and hardware stores from opening up in places where price fixing is common, the consumer gets shafted.

GA tribefan1952

A free enterprise economic system operates in this way with people who are willing to invest their time, money and energy into some sort of enterprise. It isn't perfect, because there are fallible people involved, but it is the best economic system that has ever been done.

There are a great many factors that determine pricing of products and we can't lay the blame or the credit at any one person or industries feet. Among them being; international pressures, value of the dollar, cost of production equipment, labor, insurance, liability insurance/litigation, supply and demand, transportation, unrest in various parts of the world, speculation, etc. The list goes on.

You just described the liabilities and risks that any company that is open for business has to deal with.

Your talking about a conglomerate industry that has the power to control World Economic Growth that involves more than just "fallible people", it's more like fallible nations, that can induce international pressures. Want to suppress a country or nation? Simple as closing the petro valve. What to see proof of it? Look back at how and why the United States got involved in WII.

Life is like shooting a game of Craps, but I'd rather not play when the other player has loaded dice.

Agreed, and one of the biggest forces driving the Iran deal is China, who wants their oil. Imagine how fast the Chinese can build a mega pipeline or bring refineries on line.

Now, that's hitting below the belt or should I have said, "hitting the nail on the head"

Before 1980 diesel fuel used to be cheaper than gasoline. Then everybody started buying diesel cars and the price went up. Before the height of the Arab oil embargo in 1973 I bought a Mercedes Diesel. While everyone else was waiting in long lines at the gas pump I was driving out to the truck stop and filling my tank.

And possibly changes in the demand from China, a significant consumer in the world market?

Being a diesel consumer I am very happy with the way diesel prices are falling.

Taking out /not considering the effect of the supply and demand factor away from the production cost and distribution equation, I believe the cost of diesel fuel should always be lower than the regular grade gasoline as also true in other countries. what we are seeing now seems to be a self correcting or prize normalization based on actual cost of production..

It's been that way around here for the last few months. And the speculation around here is prices are headed to under 2.00 per gal by late summer or early fall. Prices just jumped to 2.39 from 2.08 overnight a few days ago.

Why is scheduled maintenance always scheduled during the peak demands?? They all need a good spanking, if bent over the commodities table, so be it.

"Why is scheduled maintenance always scheduled during the peak demands??"

Money, dear boy, money.

By scheduling maintenance of a refinery during peak demand, they can raise the prices to astronomical levels because of the shortened supply, and in doing so, make enough profit from even a single 'sister' refinery to not only pay for the maintenance, but also pay the wages of all the workers on 'administrative leave' because their jobs at the refinery do not exist during the maintenance. And if the company owns three refineries, than the first 'sister' refinery pays for the maintenance, and the second one is just Pure Profit. And the other companies simply enjoy the windfall until the maintenance is done and it's someone else's turn for 'scheduled maintenance.' This is an example of the old saying 'a rising tide lifts all boats.' Unfortunately, the tide does nothing to lift the People who are metaphoricly anchored to the bottom. For us, the rising tide simply goes over our heads and makes it harder to breathe.

It's true that big refineries coordinate their scheduled maintenance with each other as much as possible, but that's primarily because of the enormous pool of skilled craftsmen that is needed to do the planned work in a timely manner. The refinery where I'm currently working (as an imbedded contract engineer) is planning to shut down most of the facility for planned maintenance next spring. Thousands of tradesmen from all over the region, including pipefitters, welders, laborers, concrete finishers, electricians, crane operators, riggers, iron hangers, etc. will be working around the clock for about 60 days. Every day of downtime will cost over a million dollars in lost revenue, so these things are planned almost down to the minute. There will be over a hundred cranes on site the entire time. If two large refineries in the same region tried to schedule large turnarounds simultaneously, there would likely be a shortage of skilled tradesmen available.

It's supply and demand.

I don't care how low the diesel price gets - I'm not buying a diesel car. I hate the stinking black cloud of smoke given off by diesel pickup trucks. A cousin of mine (younger than me) recently died of lung cancer, though he never smoked. He sold diesel trucks.

For a while, people would sell their vehicle to get a diesel to save money,..... but the savings never panned out. with depreciation of the vehicle they traded in and the more expensive diesel they bought.

Marketing along with David Hannum of 'one born every minute', you gotta luv it.

I'll go with price fixing and market manipulation.

How about our prices here in CA. We just dropped from $4.39/gal to $3.99/gal for regular unleaded. Don't ask about our 91 octane premium! However diesel runs $2.59/gal.

Last year, WTI was around $115/bbl and gas was $4.69/gal. So, oil drops to $50/bbl (mid July) and gas is $4.39/gal. Somebody is making a ton of money and our state Governor just lets them.

Do we really want this disfunctional, immature congress trying to regulate anything. They can't even pass simple legislation to run the country. Imagine the chaos they could cause trying to pass any meaningful legislation?

The governor is mostly powerless to do anything either.

Free enterprise may suck, but it sucks less than government control.

I'll keep my pushrod V8s and pay the price at the pump.

It's not the Governor's job to dictate gasoline prices. He should be coming up with incentives for oil companies to increase refining capacity in the state instead of barriers. If the price is higher than it should be, the reason is a shift in either supply or demand or both. The price of anything is just the point where the supply and demand curves meet. It is continually being adjusted up or down to react to changes in the supply and/or demand.

Sellers naturally charge as much as the market will bear. Competition keeps the price from skyrocketing. The population of California, and the corresponding demand for gasoline, has grown faster than their refining capacity.

Normally, I'd agree with you, but only in and efficient market, which is not what's happening in So Cal. In an efficient market, prices are dictated by supply and demand, but when there is an oligopoly (look at how few refiners we have here), prices are dictated by the small number of producers.

A few years ago, the oil refiners did the same thing. Prices rose sharply due to a change in gas formulation (from summer to winter gas - or maybe it was vice versa). Either way, the refiners shut down the plants early and sent the rumors out that there would be a shortage of gas. Overnight the prices jumped $0.15-.20 per gallon and in the following days the total was about $0.80 to $1.00 higher. Still, there was no shortage. No even days/odd days rationing or people not driving. Freeways were still clogged. The Governor stepped in and investigated - I don't remember what the outcome was, but I do remember that prices miraculously dropped.

Another time, they took the refineries off line for "cleaning", right before a holiday weekend. Prices shot up, but there was no shortage of gas. I don't remember being turned away because there was no gas to sell.

I'm not asking for the gasoline industry to be regulated with fixed pricing, fixed profits and so on. What I'm asking is for penalties to be initiated on oil refineries when they do things to artificially raise prices.

Can you say gas price control and windfall profits taxes?

How gas price controls sparked '70s shortages ...

(look at how few refiners we have here), .... You haven't been around Richmond, Martinez, Benicia or any part of the N.East Bay area, or watch how many oil tanker pass under the Golden Gate day-in & day-out. The Supposedly "gas shortage" in '73- I couldn't count how many oil tankers (Supertankers) that were anchored off shore because the refineries were at capacity and couldn't off load another drop, But yet we, the American Public was introduced to free enterprise, exorbitant prices and waiting in line that could be as long as a mile, waiting to get "10 gallons only"

How about a $10.00 head of lettuce? F-them

According to this article (from an organization some may recognize), gas prices in the USA go up and down according to the world market demand, independent of oil prices. I suppose the term "gas" also includes diesel, but I could be wrong. This is because of government regulation of crude oil exports meant to protect us somehow.

It's OK, folks. The government experts are in charge, so everything is going exactly as it should.

That article seems to indicate that US gas prices are 'programmed' to track global oil demand, but it does not say WHO devised the program, or who is in charge of setting the prices based off it.

*IS* it the government making fiat decisions about the price of gas, or is it a coalition ('collusion?') of Multinational Oil Corporations setting the prices? All these studies seem to gave that same little detail in them as a 'carrot,' "If we lifted the ban on US crude oil exports, gas would get cheaper in the US." If memory serves, it was Nixon who set up the basics of the US energy policy: "All the nations of the world will share the oil of the world, you guys pump yourselves out first, then we'll pump ourselves out, it'll be like a relay race, passing the baton. (thinking to himself) Yeah, and when we're the only ones with oil, we'll control the world. What are they going to do about it, go to war with us? Using what oil to run their tanks and boats? Heh, heh, heh."

There are two ways a nation may trade with another⁽¹⁾: selling off natural recources, or selling finished goods. Natural resources are generally less valuable than finished goods, and it is a poor choice to choose to sell those instead of keeping the resources local and making finished goods from them, which will fetch a higher price on the market. No sane nation with a manufacturing base would willingly choose to part with natural resources it could improve locally. That is why the Mideastern countries, initially poor and uneducated, Nationalized their oil fields once they learned of the true value of the resource they were initially letting foreign investors pull from under the sands for a pittance. It would seem that the Multinational Corporations, who like to think that they owe no aliegence (or taxes) to any 'mere government,' are deciding that, since they cannot get a toehold to take back the oil fields from OPEC, it is time to suck America dry and sell the oil off, leaving the now-dessicated country completely dependent on foreign oil for its continued existence.

Notes:

1. Bonds, loans, gold transfers, slave trading, etc, ignored to keep the talking points simple. All those things can be boiled down to 'natural resources of some sort,' or 'International IOUs.'