$ Differential--DIESEL vs. RUG

Harry · Post by **Harry** » Thu Dec 11, 2008 8:35 pm

Today, here in Albuquerque area, Unleaded is $1.41 to $1.55, While the cheapest Diesel is $2.14/gal. Diesel is running about 50% or so more than gasoline. How's it other places? We're being hosed here, literally.

kevin g · Post by **kevin g** » Thu Dec 11, 2008 8:51 pm

Ya there is no doubt about it. With all this talk about the economy slipping you would think that if the diesel price is lowered; the price of everything else 'should' go down as well. Considering how everything is shipped by truck.

82vdub · Post by **82vdub** » Thu Dec 11, 2008 10:20 pm

Current Green Bay, WI Prices:

unleaded: $1.64/gal
diesel: $2.49/gal

I will also add that during this whole time when diesel got close to $5/gal, it was pretty consistant that diesel was $.70-$.90/gal more than unleaded. Not a percentage, but a pretty consistant dollar number difference. Now that prices have dropped, diesel is no longer 20% more than gas, it's 50% more. I really don't care, I just keep on wheelin'

I think the reason why prices aren't dropping is that shippers/retailers couldn't raise consumer prices like they would have liked to, so they had to dip into profits and eat the additional costs for fuel. Now that fuel prices have dropped, we'll see prices slowly coming down, but they want to get some return on the profits that they couldn't get previously. I would constantly hear on the radio/TV etc that this place couldn't raise prices, that place couldn't etc because of demand. So, we get to pay a little more for a little while longer I guess.

Quantum TD · Post by **Quantum TD** » Fri Dec 12, 2008 12:27 am

The price difference has to due with what diesel is used for. Gasoline is only used in passenger vehicles and portable power equipment.

Diesel is used to transport all the goods that we consume on a daily basis (either by train, boat, or trailer). So, while there are few passenger vehicles using diesel on the road, diesel is used more in volume than gasoline.

Moreover, diesel is exactly the same as #2 heating oil (with a different colored dye). So, you're competing not only with big industry (construction, transportation, trade, transit, etc), you're competing with households in the north that use heating oil to fuel their furnaces. You won't win that war.

That's why diesel is always cheaper in the summer, and more expensive in the winter. Pay attention this summer, I'm sure diesel will be lower than gas when gas hits its peak.

Back in the 1980s and 1990s, diesel was ALWAYs cheaper, by about 20-40%. Sadly, I don't think we'll see those days again. Either way, you're still doing better than gassers (by about $0.02-0.15 per mile) even with the price difference. If that's not enough, then use the difference as an impetus to start running alternative fuels. That's the beauty of the diesel.

VW cat · Post by **VW cat** » Fri Dec 12, 2008 8:39 am

Personally I've always thought that there is no competition among oil companies and that the pump price is what they all agree to set it at. The random pricing between stations, between cities, which can sometimes change everyday is a clever deception, probably randomly set by a computer. The flack from the public only comes if the barrel price goes down and the pump price does not. Individuals do not use much diesel so it's an opportunity to get a few more bucks from sources that don't usually balk. What happen to the 'it takes 3 months to reflect the price at the pump talk'. This is just my opinion of course and I could be wrong. Phil

82vdub · Post by **82vdub** » Fri Dec 12, 2008 10:24 am

Quantum TD wrote:That's why diesel is always cheaper in the summer, and more expensive in the winter. Pay attention this summer, I'm sure diesel will be lower than gas when gas hits its peak.

I heat my house with heating oil, thus for 19 years since I've owned it, I've closely paid attention to the price of diesel, since heating oil is $.35-.40/gal cheaper because of taxes. Up until 5-6 years ago, I could always count on cheap fuel oil in the summers. I have two tanks in the garage and I would fill them up in the summer when it's cheapest, as I burn two full tanks in the winter. So, no need to fill one tank up in the winter when it's more expensive.

However, 4-5 years ago, things changed. Global demand for fuel is drastically changing, so are US fuel prices. I filled up the fuel oil tanks this summer as I didn't see cheaper fuel coming this winter (at that time), and go figure, later, prices start to fall. I'm heating my house with $3.29/gal fuel oil, when I can now get it for $2.xx/gal. That's just life, so I live with it.

VW cat wrote:Personally I've always thought that there is no competition among oil companies and that the pump price is what they all agree to set it at. The random pricing between stations, between cities, which can sometimes change everyday is a clever deception, probably randomly set by a computer. The flack from the public only comes if the barrel price goes down and the pump price does not. Individuals do not use much diesel so it's an opportunity to get a few more bucks from sources that don't usually balk. What happen to the 'it takes 3 months to reflect the price at the pump talk'. This is just my opinion of course and I could be wrong.

I believe there is some price collusion (sp?) between fuel stations, at least here in town. It's ironic that nearly all the stations in this town have the same fuel prices, but you go to other larger cities, and there's a wide variety of prices at stations. I believe there's many reasons for the same price or different prices. Things that come to mind is a piece of property that costs a lot more to purchase at one location than another, traffic counts, city taxes vary by township or area, special tax assessments etc.

I think one of the large reasons why prices fall so slowly and raise so quickly is for this one reason. You have 8000 gallons of fuel in a tank and delivery prices for fuel are slowly falling. If you drop your price for the fuel that you have in the tank too low, you've lost any profit for that prior delivery of fuel. Businesses need profits to stay in business, no matter what people think of prices. Now, think about when fuel prices are rising. You have 8000 gallons of fuel in your tank and the price is climbing so fast, that you need to make enough money on the current tank to pay for the fuel coming in a day or two on the truck. My understanding is that you pay for the fuel at delivery, not later. Say current fuel prices are $3.00/gal, but your next tank is going to cost you $3.25/gal. The first 8000 gal fuel shipment cost you $24,000, but to replace that 8000 gallons when it runs out is going to cost you $26,000. So, you need to make your normal profit, plus profit enough to cover the cost of your next product delivery. It's probably much more complex than this, but you get the idea.

I also tend to try to think of different ways to not let price swings bother me. Live below your means, make more money, or figure some way to have someone else pay for your expenses. Start a business and legally deduct some of the things you pay for now (of course you have to make money too). If you read the tax codes, they're all written for businesses, not the employee. Become the business and shift to another side of the tax code. Sure, prices effect us all, it forever will. However, I always try to figure out different ways of doing things to minimize my exposure to natural hickups in life. Yea, I know, long

Greenmachine · Post by **Greenmachine** » Fri Dec 12, 2008 3:17 pm

Here in WA diesel has consistently been about $ 1.00 more than gas. $2.74 for diesel today. We have some of the highest gas prices.

rabbit_man · Post by **rabbit_man** » Wed Dec 31, 2008 3:07 am

Central AK gas cost 2.66gal, diesel cost 3.65gal, heating oil cost 2.33gal.
It stinks how bad we're getting slammed here, it's way better than last year though, heating oil was like $3-3.80gal, it was really hard on some people just to stay warm in the winter.

surfcam · Post by **surfcam** » Wed Dec 31, 2008 1:56 pm

We are getting the big differential in Canada as well .67 for gas and .85 per liter for diesel. We had a big refiner fire in North Alberta and diesel went sky high about three month ago. Now they brought it down a little but no body really feels sorry for them when they paid the 5 million deductible on their refiner insurance policy.

lyeinyoureye · Post by **lyeinyoureye** » Thu Jan 01, 2009 4:08 pm

Refineries had a gas glut and had to make it up via margins on diesel, but that should be changing in the coming months according to an article I read.

molgrips · Post by **molgrips** » Fri Jan 02, 2009 5:41 am

Diesel here is about 95p/litre and petrol is 83p/litre. When you take into account that most of that is tax, the differential between the actual cost of the two is probably greater than you guys are paying.. and people buy much more diesel for their cars than over there.

Supply and demand rules are completely different for the two fuels. Back when petrol was Â£1.20 and diesel Â£1.35 and the oil price started to drop, an analyst guy was on the radio and he said that petrol would drop but diesel would not drop as much for various industry reasons - he was bang on.

I used to work for a company that did retail price optimisation software. Their only real customer were the oil companies. Fuel prices on the forecourt are carefully chosen by head offices based on demand and what neighbouring stations are doing and on stuff like how easy it is to pull off the road and get to the station. So there is a relationship between prices of different stations but I wouldn't call it price fixing.

CoolAirVw · Post by **CoolAirVw** » Fri Jan 02, 2009 2:16 pm

I just filled up for 1.99 per gallon! Yeah!

vanbcguy · Post by **vanbcguy** » Fri Jan 02, 2009 3:46 pm

molgrips wrote: I used to work for a company that did retail price optimisation software. Their only real customer were the oil companies. Fuel prices on the forecourt are carefully chosen by head offices based on demand and what neighbouring stations are doing and on stuff like how easy it is to pull off the road and get to the station. So there is a relationship between prices of different stations but I wouldn't call it price fixing.

I work for a company that makes software just like that for the airline industry... It's all about competition - if your fare on a $2000 ticket is $10 less than your competitor's ticket then you get all the business! Likewise if they raise their fares you want to keep that $10 difference...

Here in Vancouver gas prices are usually 100% identical station to station, or at least pretty darn close. Diesel on the other hand seems to vary quite a bit, and usually isn't on electronic display signs so it actually takes some amount of work to change. I wouldn't be at all surprised to find out they have some sort of software for gas prices around here but not for diesel since it just isn't as common.

$0.92/L for diesel here the other day btw! A heck of a lot better than $1.54 it was during the summer!