Fuel Datapoint of the Day

Steven Mufson reports on rising gas prices:

Gasoline rose to a nationwide average of $3.246 a gallon for regular unleaded. Diesel, which has been setting records almost daily for the past three weeks, hit a nationwide average of $3.876 yesterday.

Which means that diesel is now 63 cents per gallon more expensive than regular gasoline. I don’t have a graph of the diesel-gasoline spread, but I’d guess that’s at or near all-time highs; it wasn’t so long ago that diesel was cheaper than gasoline.

Mufson reports that "more and more Americans are driving cars that use diesel because they get better mileage," but that trend is unlikely to stay strong for long if diesel is 20% more expensive than gasoline. The calculations can get very technical, and involve resale values as well as fuel-economy considerations, but with today’s fuel-injection technology it’s unlikely you’ll find a diesel-powered car which gets 20% better mileage than the equivalent gasoline model.

Why is diesel more expensive than gasoline? Here’s the official answer, from the Energy Information Administration:

Until several years ago, the average price of diesel fuel was usually lower than the average price of gasoline. In some winters when the demand for distillate heating oil was high, the price of diesel fuel rose above the gasoline price. Since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline all year round for several reasons. Worldwide demand for diesel fuel and other distillate fuel oils has been increasing steadily, with strong demand in China, Europe, and the U.S., putting more pressure on the tight global refining capacity. In the U.S., the transition to low-sulfur diesel fuel has affected diesel fuel production and distribution costs. Also, the Federal excise tax on diesel fuel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline.

What that means for the diesel-gasoline spread, I have no idea. But don’t expect to see the US becoming a Europe-style land of diesel-powered cars any time soon.

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