Diesel or gasoline vehicles

Diesel And Gas Prices

Over the years, the prices of both gas and diesel
have experienced some drastic changes. Many years
ago, the price of gas was around a dollar or a
little more, nothing like it is today. Back then,
gas wasn’t high in price although the demand for
vehicles wasn’t what it is today either.

As the demand for vehicles grew, the demand for
fuel grew as well. Other actions and events have
played into the equation as well, resulting in
the rising costs of fuel. Fuel is something we
all need to run our vehicles, as we wouldn’t be
able to go anywhere without it.

As you may know, a majority of the gas we get at
local gas stations comes from overseas, primarily
the Middle East. Therefore, we have to pay taxes
and such on the gas we use, which pays for the
gas as well as the shipping. If we got our gas
from within the United States, one can’t help
but wonder whether or not the prices would indeed
be lower.

Diesel on the other hand, has always managed
to keep a price lower than gas. Diesel comes
from within the United States, so the prices are
of course going to be lower. The only problem
associated with diesel fuel is locating it, as
many gas stations don’t sell it.

When it comes to the choice between the two,
diesel fuel is obviously cheaper to buy. Gas is
in supply more, which means that you can find
it almost anywhere. If you own a gasoline
vehicle, you obviously don’t want to put diesel
in it. If you own a diesel vehicle, then you
of course wouldn’t want to put gas in it either.

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Advantages Of Diesel Engines

If you’ve owned a diesel powered vehicle in the
past or if you own one now, you no doubt appreciate
the qualities this engine provides you with. More
torque, better fuel economy, and easier maintenance
are but a few of the attributes of owning diesel
powered vehicles.

However, there are some motorists that still
complain about the engine’s weak power, especially
when accelerating from a full stop. What you
may not be aware of is the fact that a diesel
engine can be tweaked to give more power without
harming the fuel economy.

Diesel engines use air compression to create
combustion versus the fuel/air mixture that is
required by gas engines. This attribute means
that diesel engines don’t require spark plugs
and therefore don’t need to be tuned up.

Diesel fuel has a much high fuel density than
gas, which results in fuel economy increases
of 20 – 30% over gasoline powered vehicles.

Diesel engines are also cheaper to maintain as
they have less parts than that of a gasoline
powered engine. The life span of a diesel
engine is also much longer.

If you’re looking for torque, for pulling a
boat or other equipment, then the diesel
engine has the supreme advantage. Diesel
engines are surely slower, especially when
starting from a dead stop, although when you
climb hills or go over bridges, the diesel
engine is surely up to the task.

With trucks, diesel is normally the leader
over gas engines in terms of performance and
miles per gallon. Diesel trucks will get
more miles than gas trucks, and the price for
diesel is a bit cheaper than gas these days.
And with gas prices on the rise, diesel will
continue to dominate for a long time to come.

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Why Diesel Fuel Prices Are High

Diesel fuel prices used to be less than gasoline prices. But a lot of people are now wondering why diesel fuel costs higher than gasoline. The primary reason is the increasing global demand. The other factors would be environmental restrictions and higher federal taxes. (All of these will be tackled in detail below.)

What people do not realize is that the pattern shifts. During the summer, people tend to use their vehicles for vacations; this in turn increases the cost of gasoline. During the winter, people tend to stay at home and generate a high demand for heating oil; this in turn increases the cost of diesel fuel. The correlation between heating oil and diesel is that they are similar fuel and that the price of the heating oil tends to set a floor for diesel.

The widening spread between the prices of diesel fuel and gasoline is partly due to the lull in the demand for gasoline, which can be attributed to high prices and soft economy. If people would just increase their consumption as rapidly as before, then the prices of gasoline would be higher. In return, the spread between the prices of diesel fuel and gasoline will not be as wide as it is now.

Increasing Global Demand

There is an increasing demand for diesel fuel worldwide—that is, in the United States, Europe, China, and India. In Europe, more vehicles with diesel engines were sold in the past few years. More than 50 percent of new registrations for 2007 were diesel-consuming vehicles. In India, the same trend applies: the numbers of new vehicles sold have doubled in five years, and 30 percent of which is diesel-powered. This percentage is projected to reach 50 percent by 2010. In China, the increasing demand for diesel fuel is in direct proportion with its economy. With them hosting the Olympics plus the earthquake that hit them recently, higher demand for diesel fuel is foreseen to avoid interruptions and to run heavy equipment and emergency generators.

Environmental Restrictions

The shift to ultra-low sulfur diesel fuel in the United States is an ongoing project since 2006. Its goal is to apply this standard to all on-highway diesel fuel by December 2010. There are also standards for off-highway diesel fuel such as fuel for generators, construction machinery, and marine use. This drastic change is an expensive process altogether as it will target the production of all diesel fuel, which in turn has affected the selling price of diesel fuel. A projection has it that this expensive process would require refiners to invest a large amount of money, and this will make them increase the prices of diesel fuel between 2007 and 2011. Moreover, a production bottleneck will probably result in higher price spikes.

Higher Federal Taxes

The tax for diesel fuel is higher than the tax for gasoline. And naturally, the higher the tax, the higher will be the price at the pump. This has been the trend for several years, and this is the explanation why diesel has sold for an average of 1.3 percent more than gasoline over a specific period of time.

There are more factors affecting diesel fuel prices. Having an understanding how the pricing works will help you find ways to go around the soaring prices. And with this knowledge, you can have a grasp of the trends and create your own projection to aid your budget planning.

What Constitutes Diesel Fuel Prices?

Tracing its name from its German inventor, Rudolf Diesel, diesel fuel is what is used in the compression ignition engines of motor vehicles. It is important to a country’s economy, quality of life, and national security. Any fluctuation of its price will have an effect on how people live because of its direct and indirect relationship with the other consumer products. There are different factors that determine diesel fuel prices but first we have to have an understanding of how it is produced and used.

Diesel Fuel Quality and the Environment

From crude oil, there are a lot of products that can be produced. These are gasoline, diesel, other distillates (heating oil), heavy fuel oil (residual), jet fuel, liquefied petroleum gases (LPG), and other products. There are different grades or types of petroleum diesel. The Number 2 type is the main source for motor diesel fuel utilized in the United States. It is the same type used for heating buildings and in the industry.

It has relatively low sulfur content, which is an important characteristic tested for diesel fuels. In 2006, the new Environmental Protection Agency (EPA) standards for diesel fuel sulfur content were implemented. Ultra-Low Sulfur Diesel (ULSD) fuel which has a sulfur content of less than 15 parts per million (ppm) had to be sold in the United States, which in turn replaced most of the Low Sulfur Diesel (LSD) fuel.

Diesel engines can be found in nearly all semi-trucks, delivery vehicles, buses, trains, ships, boats and barges, as well as farm, construction and military vehicles and vehicles. Because of this widespread use, people have always been thinking of ways to manufacture products that are safe for the environment. Biodiesel falls under this category and is produced from vegetable oils, animal fats, or recycled restaurant grease. Its name denotes that it is biodegradable and can lessen vehicle emissions of carbon monoxide, hydrocarbons, and particulates.

Diesel Fuel Production and Delivery

In the United States, most diesel fuel that is consumed is produced in their local refineries. Additionally, a small percentage of fuel is mainly imported from Canada and the Virgin Islands. From both local and imported crude oil, diesel fuel is manufactured by the local refineries and it is transported by pipeline from these refineries and ports to the terminals in close proximity to the main consuming areas. Then it is put in tanker trucks for delivery to retail service stations.

Diesel Fuel Cost Components

Inclusive in the cost to manufacture and transport diesel fuel to the consumers are the costs of crude oil, refinery processing, marketing and distribution, and retail station operation. The costs and profits of the refiners, marketers, distributors, and retail station owners are reflected in the retail pump price. The comparative share of these cost components to the retail price varies over time and among the country’s regions.

The price at the pump also is inclusive of federal, state, and local taxes. In other states, counties, and city governments levy additional taxes. Local market conditions and other factors such as the location and the marketing strategy of the owner are reflected in the retail price as well.

The components of diesel fuel prices can be broken down into the following (from highest to lowest percentage): crude oil, refining, taxes, and distribution and marketing. Knowing this information will give the consumers a clearer picture why the prices are pegged at such and why they fluctuate.

What Can You Do About Rising Diesel Fuel Prices?

Diesel fuel is one of the most important commodities on the economic landscape. The reason for this is that the transportation used in almost all aspects of the economy is fueled by diesel engines. Rising diesel fuel prices usually translate to rising costs of products and services. In order to know what can be done to slow down this increase, you as a consumer need to understand its causes.

Elements of Worth

There are several basic elements that determine the worth of a gallon of diesel. About sixty percent of the cost of diesel reflects the price of crude oil, which is raw material for diesel production. Crude oil is purchased from oil producing countries and subsequently brought to refineries where the ultra-low sulfur diesel, among other petroleum products, is extracted. Given a barrel of crude, a refinery will be able to distill about one tenth of a barrel of diesel. Refining accounts for nearly twenty percent of diesel fuel cost.

The remaining elements of the cost of diesel fuel are government taxes and the expense of marketing and distribution. A ten percent excise tax is levied onto all fuel products that are manufactured in the country. Although foreign fuel avoids this, it is generally cheaper to buy locally refined fuel as import taxes generally translate to higher unit price. Marketing and distribution only makes up five percent of total diesel fuel cost, but this can often be the most volatile factor affecting the value of diesel fuel.

Origins of Increase

Basically, the price of everything is dependent on supply and demand. If supply is low and demand is high, prices will go up. If supply is plentiful, the price will stay steady, and may even decrease when demand wanes.

Crude oil supply is dependent on oil producing countries, so anything that disrupts their production activities, like wars or economic embargoes, will drive the price of both world crude and diesel up. Refining costs are generally pretty stable, but both local and foreign companies compete for refined fuel. If the demand of foreign countries for the diesel produced by local refineries increases, this can ultimately result in elevated fuel costs.

The most unstable factor that affects diesel fuel is undoubtedly local marketing and distribution. Diesel fuel is in such high and constant demand that fuel stockpiles are generally pretty shallow. This means that if there is a sudden spike in fuel consumption, the warehoused supply will not be enough and this will drive the price of fuel up. Another factor is distance; consumers close to refineries tend to pay less because they avoid transportation costs. Local competition also plays an important role in regulating fuel prices.

Control Stems from Understanding

World supply and demand, international politics, economic pressures, all of these play interrelated roles in the cost of fuel. Though they seem beyond the comprehension of the non-economist layman, it all really boils down to supply and demand, and this is something anyone can understand. Saving fuel and lowering consumption is not only good for the environment; it decreases demand, and ultimately, cost. Programs which promote peace and goodwill among nations do not only make a better world; they result in less disruption of supply lines, and again, decrease fuel costs.

The factors that affect diesel fuel prices seem complex, but an understanding of the basic principles can empower the individual consumer. Unsurprisingly, it would seem that doing the right thing really is the right thing to do.

Understanding the Increase in Diesel Fuel Prices

It was only in recent years that diesel fuel prices soared above gas prices. These two fuel categories used to have different peak seasons, with gasoline prices enjoying greater primacy in pricing over longer months. Gasoline then had the biggest gap in prices from diesel fuel during the summer months, when demand for gasoline peaked as a result of families taking long drives across states. Meanwhile, diesel fuels scored higher prices during the winter months, when the demand for distilled heating oils used at home increases as well. This is because distilled heating oil and diesel fuels are refined in the same facility using the same process, causing the demand for diesel fuel and distilled heating oil to act in a parallel manner.

The increase in the base price levels of both gasoline and diesel fuel has been primarily driven by the worldwide increase in crude oil prices. Crude oil is the basic ingredient from where different forms of fuels are derived from.

However, there are three particular reasons why the demand for diesel fuel have increased over time, the first being increasing demand, the second being the slackening demand for gasoline, and third being new environmental restrictions on gasoline.

First, there has been an increasing demand all over the world for diesel because of the increase in number of diesel-powered engines. In years when gasoline prices soared over diesel prices, car manufacturers produced cheaper diesel-powered vehicles in order to capture the market of consumers who wanted to save on gasoline prices. However, the fact that these diesel-powered vehicles have outsold gasoline-powered ones has obviously caused more people demanding diesel fuel to run their engines. This trend is true not only in the United States, but also in China, Europe, and India. With a limited supply of diesel fuel produced annually, increases in demand causes the price to distort upward.

In addition, the relative increase of prices of diesel fuel products have made gas prices appear much cheaper, especially with less people choosing to buy gasoline. Increasing consumption of diesel fuel has driven up its prices, whereas a near steady to decreasing consumption of gasoline has led to its price to remain stable, if not decreasing as well over time. This increases the relative price gap between the two.

Lastly, government legislation has caused the regulation that requires the reduction of sulphur content in diesel from 500 million parts per gallon to 15 parts per gallon. The process of reducing sulphur in diesel to this extent will cause greater expense in refining and producing retail-ready diesel fuel for consumption. In the year 2006, the goal was to have 80% of motorist traffic complying with this ordinance; by 2010, 100% of diesel available in the market must comply. As with all industries, the cost of additional stages of processing will be levied on the final retail prices of diesel fuels, causing a greater increase in prices above the already significant impact that high demand has on it.

When looking at diesel prices, it is important to appreciate what drives the increases in prices, and even the standards for when people say prices have increased. For the latter, the relative increase in diesel prices in conjunction to the relative stability or decrease of gasoline prices has increased the perception of more expensive diesel prices. The drivers for increases in diesel fuel prices, however, remain to be that of increasing demand for the limited supply of diesel fuel, as well as costly processing of diesel in order for it to comply with environmental standards.

The Usefulness of Water amidst the Diesel Fuel Prices

There is no doubt that the diesel fuel prices nowadays have gone too high. Preferably, diesel is supposedly more affordable than gasoline itself. What has happened now? It seems that the two are in a race and the most positive conclusion to what is currently happening is that even diesel has a skyrocketing price. Where does this leave the car users other than on the losing end? True enough, with its escalating amount in the market, the consumers are more and more pushed to their limits. Add to it the looming financial crisis and unstable economic status all over the world.

A few years back then, experts have revealed that water can serve as an alternative to diesel fuel. The public was hence taken aback. Others heaved a sigh of relief and believed in the latest findings whereas some doubtful individuals raised their eyebrows. The news have struck the technology-wise bodies so unsurprisingly, studies have been conducted to prove it and come up with a technological break for water as a substitute for fuel. Many people have trusted that diesel fuel will never be on equal footing with the price projected by gasoline yet the opposite thing has turned up this time. This article is then going to provide you with a quick background as to why water can be used in place of diesel fuel.

Taking a Look at this Substantial Substitute

The concept behind it is to utilize the hydrogen gas or H2 as an alternative fuel instead of diesel. As of the moment, no fixed technology has yet been unraveled that will let a vehicle run by solely using hydrogen gas but the specialists are on the course of coming up with an output. For now, they have found out that teaming up the hydrogen gas with that of diesel will enhance the car mileage.

Hydrogen gas is rooted from water using an electrolysis device and the latter pulls some power from the car battery. As soon as the required circuit has been enabled, hydrogen gas will be generated. The next step is to discharge the H2 towards the engine air intake system. This phase will bring gas towards the combustion chambers and then mix up with the diesel fume. As a result, the mixture will turn out to be sturdier, more effective, and smoother in terms of the engine’s burning power. As for the car users, the vehicle can boost its mileage and bring in lots of savings.

Use of Water Fuel Conversion Kits

You don’t have to focus much on statistics and other mathematical equations to let the water fuel work. It is easy. The parts that should comprise the electrolysis device are widely available from the hardware stores. The water fuel conversion kits allow the splitting of water and hydrogen. All you have to do is to take note of the step by step procedure. You can also check the procedure online. If you feel that you need a professional to do it, there are mechanics and other car technicians who can help you out.

With the rising diesel fuel prices, consumers like you are left with no other choice but to look for affordable alternatives. Thanks to modern technology along with the experts since they never fail to unearth profound solutions to problems such as this.

The Basic Fact Sheet on Diesel Fuel Prices

As consumers, the basic basket of goods that we often purchase in the course of everyday involves diesel and other fuel products, making us susceptible to the impact of diesel fuel prices. Diesel fuel, gasoline, and oil are used not only in running cars and other transport vehicles, but also are used for cooking, heating the home, and powering diesel-powered equipment like snow-blowers, lawn-mowers, and the like. A huge chunk of expenditure goes to purchasing fuel to run these vital activities, which would justify trying to understand as much as one can about how it is priced and where the product itself is from.

To start with, diesel fuel is one of the refined versions derived from basic crude oil. Other forms of crude oil that results from refining include gasoline and distillate heating oil. This fuel type was named after Rudolf Diesel, the German engineer who created ignition engines that make use of diesel fuel.

Diesel petroleum is in fact a distillate of crude oil. While there are many types of distillates that can be derived from crude oil, Number 2 distillate is what is distributed for use in vehicles and equipment in many countries; it is also the same oil base used for distillate heating oils used to heat buildings and run industrial plants.

The chain of processes that create the value inherent in diesel fuel begins from the moment crude oil is purchased. Crude oil, as mentioned previously, is the base ingredient from where diesel fuel is derived. This base ingredient is traded internationally, with price determined by supply and demand dynamics. Crude oil is primarily produced by oil-exporting countries, all of which often belong to big oil cartels that dominate the supply dynamics in the market.

The demand for energy is not limited to the United States, but expands across Europe, China, and India. The thirst for energy for consumption occurs both in the level of industry, as well as individual consumers. On the consumer level, this means that the strong preference for diesel-powered vehicles has led to the need for diesel fuel in order to maintain the operations of these vehicles. In the industry level, expanding economies like China and India, and more stable economies like European ones, all rely on the supply of diesel fuel to run many of their transport sectors and even many of their industries. The high demand from both sectors has driven the prices of diesel fuel up: with limited supply, people use money in order to gain preferential access to the resource.

In addition, governments play a role in determining how diesel fuels arrive at the point of mass consumption. Governments levy hefty taxes on oil refining and distribution companies, many of which already run the regular gas pumping stations. Also, governments have required the reduction of sulphur content in diesel fuel, creating an expensive additional stage in the refining process to reduce sulphur. The additional burden of tax, the cost of operating distribution through gas pumping stations, and the cost of building infrastructure to enable them to comply with government ordinances have driven diesel prices to higher levels even if production costs considerations were ignored.

Knowing these drivers, and just what this resource is all about, allows consumers to better appreciate the dynamics of the energy industry. They will also be able to use their common knowledge of market dynamics in order to predict or protect themselves from diesel fuel prices inflation.

Some Alternatives to the Shocking Diesel Fuel Prices

Indeed, the world is faced by a spectrum of problems nowadays. The issue on recession has not yet died out but seems to be worsening even more. Add to it the fact that the cost of the basic commodities have also soared up. One of the shocking revelations that confront people, especially the car and truck owners is the increase in the diesel fuel prices. With the presence of all of the political and financial struggles all throughout the globe, this thing is another unwelcomed event.

However, no one can deny the fact that diesel fuel is very vital. It runs cars and industries. Simply put, the world is dependent on it. No one can just do without it. It seems though that no one is in control of its escalating price. The market is filled with uncertainties so the price of fuel changes every now and then. Therefore, the people are in search of ways on how to fight off the deliberately shocking value of the fuel which is in fact an integral part of human life.

Run Your Car on Water

Some years before, there were individuals who claimed that it is possible to run cars on water. There were of course people who gasped and heaved some sigh of relief yet the others were under some disbelieving notion. As it goes, running car on water means that car and truck users can now save money and at the same time promote the so-called concept of « going green ». With water acting as the fuel, there will be lesser emissions which mean that the environment will be in a safer state.

The rumors need to be clarified though. Yes, it is possible to use water as a substitute for diesel fuel. However, it can’t be done outright. What has to be done is to extract the water component that is known as hydrogen gas or H2 by using the electrolysis device which will channel the output towards the engine air intake system. As soon as the hydrogen gas is blended with the normal type of diesel fuel, the combustion chambers will burn the mixture and then produce some enormous and powerful produce. This will then lead to more effective mileage.

The process is done by means of electrolysis. As you know, water is made up of two parts hydrogen and then 1 part of oxygen. This is the main reason as to why it is labeled as H2O. The procedure of letting electricity pass through water, the « Brown gas » or technically known as hydrogen will be separated from it. On the other hand, the Brown gas is itself one type of combustible gas which is an absolute source of energy for vehicles.

Resort to Biodiesel

Biodiesel is one more alternative that people can turn to. It can be rooted from vegetable oils, animal fats, and from the used restaurant grease. In some parts of the world, farmers are selling their corn produce to the biodiesel generating industries. While some parties think that this is an unwise move because instead of growing the corn to feed the hungry mouths of the population, they are given up for the production of fuel. Meanwhile, for the farmers, anything that will give them money is good enough to provide for their needs.

Needless to say, these are some of the alternatives that can be adhered to in order to fight off the rising diesel fuel prices.

Projection for Diesel Fuel Prices

For as long as the prices of crude oil and the demand for distillate fuels are maintained at a high level, the retail diesel fuel prices will in most likelihood be high, too. The Energy Information Association (EIA) has released a report on what is likely to happen for remainder of 2008 and 2009 for the United States. It states that the national average retail prices for diesel fuel will reach its highest point during the third quarter of 2008 then it will decline by the fourth quarter of 2009.

However, these are just projections; hence, there is no assurance or guarantee because it can be greatly affected by the instability and unpredictability of the prices of crude oil and petroleum products. Among the many factors that affect the prices, below are the main ones that are faced by United States, especially the West Coast countries:

The Effect of Sulfur on Prices

The Environmental Protection Agency (EPA) standards for diesel fuel sulfur content can also alter the prices for diesel fuel. What needs to be taken into consideration is the logistics of delivery of the Ultra-Low Sulfur Diesel (ULSD) fuel to retail service stations. Most of these products are transported via pipelines to reach the bulk terminals then to tanker trucks then finally to the retail stations. Contamination may happen to the ULSD fuel because these pipelines, storage, and local distribution systems also serve to deliver other diesel fuels and petroleum products, which have higher sulfur content. If a batch of ULSD fuel gets contaminated, it might not be an option to mix it with additional low-sulfur product to bring back its sulfur content to the original level. The contaminated batch has to be returned to get reprocessed in a refinery, and this solution is a difficult and expensive one. More so, the production of ULSD fuel entails a big expense to begin with. So any problems that might arise along the way with regard to delivery will just add up to the expense.

Geography and Taxes

Another factor that affects the prices of diesel fuel in the United States is the geography. West Coast countries have generally higher prices than the other parts of the country. This holds true especially for California because of the taxes and issues on the supply. These countries add more tax—that is, they combine the state and local taxes, and add another tax value on top of the federal excise tax and state tax. Washington is one of the countries that have the highest tax.

Geography and Relief Supplies

The West Coast countries also have higher prices for diesel fuel because they have relatively fewer supply sources. Because majority of the refineries in this region are located in California, a single refinery that encounters difficulties in operations will greatly affect the diesel supply. In turn, this may elevate the prices because there will be fewer supply to meet the high demand. More so, the West Coast is very far from the Gulf Coast and other foreign refineries—that is, any fluctuation on supply-demand will generally result in price fluctuation because it will take some time to transport relief supplies to these countries. The farther the relief supplies are, the higher the diesel fuels prices will be and the longer it will remain at such price.