The Villian In The Diesel Fuel Price Disparity [ Archive] - GasSavers.org - Helping You Save at the Pump

The case against the usual suspect - the EPA is airtight.

The government knew as far back as 2001 that the EPA?s ULSD and Tier II regulations would have a catastrophic effect on diesel fuel prices. Here?s May 2001 study on the subject.

http://tonto.eia.doe.gov/FTPROOT/service/oiaf2001-01.pdf

If you don?t have the time to chop through nearly 200 pages, this is the long and the short of it.

Regulation 6.7 cents
Capital investment costs 7.6 cents
Revamp costs 6.9 cents
10% down grade costs 7.1 cents (some ULSD will be downgraded to LSD)
Efficiency loss 6.7 cents
Energy loss 7.0 cents
Imports not meeting new spec 8.1 cents

Total 50.1 cents per gallon

And these figures (as the link explains) are in 1999 dollars. This is why diesel now costs 60 cents a gallon more than unleaded.

All this is over and above price increases due to the cost of crude, now sitting at about $2.60/gallon.

Add on top of that the fact that Tier II robbed diesels of about 4% of their efficiency.

Thank the EPA.

Yeah, the more money we send to government yields less intelligence in policy changes.

Higher cost of food, getting to work, getting kids to schools, etc.

If it were only market driven conditions, I wouldn't complain so much, but it's too many consistent policy boondoggles that have made a mess of so many things.

Yeah, the more money we send to government yields less intelligence in policy changes.

[...]

getting kids to schoolsFer sure. Those little punks don't need less pollution (http://www.p2pays.org/ref/36/35362.pdf) from diesel school buses. They need more! Natural selection and alla that. ;)

Can't help you. Works in Europe. Good day.

We've got an oversupply of gasoline at the moment. Diesel supplies are around normal. Crude oil prices have been going up. Gasoline prices have been going up, but not as fast as crude. Diesel prices have been going up faster than crude oil.

http://tonto.eia.doe.gov/oog/info/twip/twip.asp

I think people are just taking profits where they can.

However, I don't know exactly why we have so much more gasoline than diesel.

Can't help you. Works in Europe. Good day.Lies! Lies and slander. Feed your children smog and grow strong hu-man! :thumbup:However, I don't know exactly why we have so much more gasoline than diesel.The US is the world's largest consumer of oil, and due to the nature of it's fleet, gasoline. Since we're on the edge of a recession, more or less, demand for gasoline has dropped, and reserves have been increasing (http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html) (under stocks) for the past few months. Otoh, since most of the price increases US consumers have seen is due to the weakness of the dollar, other parts of the world, such as the EU, can buy our diesel at greater rates (http://tonto.eia.doe.gov/oog/info/twip/twip_distillate.html), which lowers stocks and drives up the price of it here until refiners adjust to the change in demand via altering their crack spreads and a new equilibrium range is found based on the price of oil compared to the dollar index.

Didn't read the link, did you?

Supply and demand have nothing to do with it.

The price disparity is entirely due to additional costs mandated by the ULSD regs. Supply can be tight or supply can be plentiful, but nobody sell diesel fuel at a loss, so the price has to go up.

Some people just cannot bring themselves to believe what monsters the EPA extremists are.

Didn't read the link, did you?


Did you? You're wildly misrepresenting this study.

This was an EIA study on ULSD costs under various assumptions. The figures are the increase over the "reference" 500ppm diesel case. The "regulation" case assumes that the ULSD transition goes as smoothly as expected. The others are more pessimistic. They don't add together, in fact they already assume every case you list put together (except the 'no imports' case) in the 'severe' case at 8.4 cents. What you call 'imports not meeting spec' actually assumes zero ULSD imports. This was too over-the-top for them to include in the 'severe' case.

The worst they could think of was 8 cents, not 50. Seriously, just read appendix E. It lists absolute price estimates instead of differences from a base case. Note these are just prices... you still could add in the worst-case 4% efficiency you mentioned (only affecting new motors until they sort the tech out), plus at another 1.8% reduction in energy content.

Studies aside, ULSD clearly didn't cause the price increase. Look at the EIA's "This Week In Petroleum"... retail road diesel averaged $3.974 last week, but heating oil averaged $3.852. Heating oil isn't just high sulfur... it's not taxed! Wholesale is about 11 cents more for road diesel than heating oil. But it's always been more, due to cetane and so on. So don't blame the EPA. Blame the Chinese like everyone else. :)

Every now and then I get a whiff of a pre-emission car that is still in running condition and I thank my parents and others that were of voting age back then (I was but 10 years old) that said enough and chose leaders that would institute and enforce cleaner air regulations.
I don't and won't stand for attempts at rolling back standards just to temporarily drop pump price by a penny or two until profit greed eats that up, leaving you and I with dirtier fuel, dirtier air, and the same pump price anyway.
If anyone likes sulfur dioxide and acid rain so much, I suggest you go eat a book of matches and wash it down with battery acid.
"Tonto" indeed...

Lugnut posted?
??to temporarily drop pump price by a penny or two??

Dave says:
Its 70-90 cents a gallon and 4% reduction in diesel engine efficiency.

Nobody is talking about going back to 1970 regulations, just 2006. BTW, in its 2005 report to Congress, the EPA noted that air quality in the US is currently the best it has been in living memory.

As I asked someone somewhere else: What is the metric of the payoff of these regulations? Will it reduce nationwide SO2 and/or PM2.5 ambient concentrations by as much as one microgram per cubic meter? Will it result in lower cancer rates, or decreased asthma rates?

These regs appear to be like the ban on CFC?s - all pain and no gain.

I would ask Randy this: If they don?t add up, how do you explain the 70-90 cent per gallon price disparity between unleaded and diesel? We can lay the overall increase of both gas and diesel to the Chinese demand but that huge differential between gas and diesel is what I?m talking.

Will it result in lower cancer rates, or decreased asthma rates?That's pretty much the whole basis for it. While it isn't an issue for most, due to trade it's really bad in certain regions, hence the legislation. More or less, certain states are tired of paying for the externalities of said emissions, such as premature deaths, health problems, and diminished productivity. Since the amortized cost of retrofitting the fleet is so much smaller than this, they initially announced they were going ahead with these plans and provided incentives for the worst emitters.

As for why this diesel price spike is greater than others, off-road use switched to lower sulfur diesel while a cold spike drove up demand for heating oil, and as such the prices of all distillates have increased to reflect this change in demand. It's detailed here (http://tonto.eia.doe.gov/oog/info/twip/twip.asp).However, as discussed in the January 24, 2008 issue of TWIP , inventories of high sulfur distillate fuel, the product specifically identified as heating oil, were relatively low, even from the outset of winter, due to a shift of a significant portion of high sulfur distillate usage (the off road sector) to low sulfur diesel fuel consumption. Inventories, particularly in New England and the Middle Atlantic regions, remain at relatively low levels, reflecting the strong global market for distillate fuels.I'm guessing the reason why this wasn't seen during the initial switch to ULSD is because that was during the summer, when diesel prices tend to drop. Switching off-road to ULSD when demand for distillates was higher resulted in even higher prices. Also, given the current crack ratios used, the relatively low demand for gasoline might have served to exacerbate low distillate stocks.Ironically, bulging gasoline inventories and associated US gasoline market weakness may have exacerbated distillate markets by reducing outlets for surplus gasoline production, which accompanies distillate production.

I would ask Randy this: If they don?t add up, how do you explain the 70-90 cent per gallon price disparity between unleaded and diesel?

Diesel should be somewhat (10-20%) more expensive than gas, due to higher energy per gallon. It was cheaper in the US before the 90's because of the relative demand and the expense of refining it into gas. As the technology improved, refineries installed equipment to do that, pushing gas and diesel closer to even. Now worldwide diesel demand is high and growing fast. Europe increasingly uses diesel for personal use, leading to more gas and less diesel for export. Industry needs diesel in developing countries. But gasoline use in the US is actually down slightly. Ethanol prices are way down (10+% of gasoline). Refineries need time and investment to adjust to this new demand. Long term this should work itself out.

I still think that ULSD can't be the cause of the diesel price spike, because heating oil is also very expensive. If worldwide diesel demand is the cause it should push their prices close to the actual costs of upgrading the fuel (most world diesel is closer to heating oil).

In recent years, gas has gone way up in summer. Probably it won't go over diesel, but it's possible. Certainly it will be a lot closer in a few months than it is now.

Lugnut posted?
??to temporarily drop pump price by a penny or two??
No. What I posted was "...to temporarily drop pump price by a penny or two until profit greed eats that up,..." The pump price has been shown to not be a dissuading factor in use levels. If the COST goes down, don't expect the PRICE to go down. If we willingly pay $4.20 a gallon today for fuel that costs the station $4 a gallon, why would we not pay $4.15 a gallon next month for fuel which costs the station $3.50?

If we willingly pay $4.20 a gallon today for fuel that costs the station $4 a gallon, why would we not pay $4.15 a gallon next month for fuel which costs the station $3.50?That depends on whether or not said gas stations can form an effective cartel (http://en.wikipedia.org/wiki/Cartel#When_are_Cartels_more_likely.3F). I think it would be quite hard now.

Out here on the frozen steppes the differential is now up to a buck a gallon. $3.05 for unleaded. $4.05 for diesel. Thats a 33% premium. The heating value difference might justify a 16% premium.

Something this big and widespread is beyond mere short term pricing what the traffic will bear. It is the result of government regulations.

Something this big and widespread is beyond mere short term pricing what the traffic will bear. It is the result of government regulations.So if price drops back down to the usual levels later on, does that mean these government regulations have been repealed?

Big Dave and SD26,

SOS(tuff)...

gov't knows best, global warming, increased taxes are a must, etc.

tho i use diesel everyday, i can't speak on the subject. however, i do know another branch of gov't...

the USDA comes to my workplace(wholesale produce) by charged appointment if we desire it. this helps us to cut losses(shrinkage) due to poor product being sent. we can only refuse it IF the USDA deems it a "bad shipment."

NOW, the USDA employee will ask to see a predetermined % of the load. so, let's arbitrarily say that 50% of the load is molded. if the handful of cases of that particular item that he/she selects are fine, we MUST accept the entire load AT OUR LOSS!!!

our facility is certified by several gov't and non-gov't agencies. so we do in fact take a loss by throwing the product away. other produce companies DO NOT(they send out as much as can be). the health ramifications do not need to be dicussed i presume!

so, our fine gov't asks companies to take a loss and leaves the fate of the health of the general public to those that may or may not have integrity. sound familiar?

Completely.

More socialist actions that don't allow the citizens to be responsible for their decisions.

Too much over the top protection.

The diesel boondoggle is what it is Big Dave. Short version was fine from you. It makes everything more expensive, and, of course, it hits those with lower incomes harder than those with incomes above them...and the cycle of those that want to tax more "the rich" to redistribute wealth to others continues after that.