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Why is diesel more expensive than gas?


Why is diesel more expensive than gas?

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Diesel prices soaring beyond crude, gasoline — and are likely to stay that way

Diesel has been climbing at a rate far greater than that of gasoline or crude, and a well-known economist offers reasons why that is likely to continue.

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For the most part, Diesel has been a more expensive fuel option than gasoline in recent years. This is primarily due to high federal and state taxes. Federal taxes on diesel is 24.4 cents per gallon compared to 18.4 cents per gallon of gasoline. Some states tack on as much as 74.1 cents per gallon on the state side of the tax.

As a general rule, diesel fuel is subject to a much higher federal tax than gasoline in the US, which obviously yields increased diesel prices to the consumer. The evolution of diesel fuel In years previous, a diesel engine most likely conjured an image of a loud, obnoxious vehicle spewing black smoke with every gun of the engine.

Why is diesel fuel more expensive than gas? The main reason diesel is more expensive than gasoline is because of taxes. 

Diesel fuel costs have been higher than conventional gasoline prices in recent years for three key reasons: Diesel and other distillate fuel oils have seen strong demand, particularly in Europe, China, India, and the United States.

First of all, much of the diesel used in the U.S. is refined in Europe, where, due to favorable tax policies and fuel efficiency, diesel cars have made a major comeback.

Part of the reason diesel fuel is more expensive than gas is the total amount of federal and state taxes added to each gallon. In many other countries, diesel fuel is still much cheaper than petrol, and there are significantly more diesel-powered passenger vehicles on European and Asian roadways.

The first reason diesel costs more than gasoline is that the demand for diesel fuel increased. That required more exploration and drilling, which is an added expense for operations. Second, is the transition to fewer pollution types of diesel fuels such as lower sulfur content. That increased the price of production and distribution.

While gasoline prices at the pump have held steady over the past week, the price of diesel continued to rise, gaining about 8 cents per gallon to a national average of $5.12 per gallon.

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