Why Does Diesel Cost More Than Gasoline?

W.H. Riley & Son offers businesses in and near Bristol County high-quality diesel fuel for both on-road and off-road vehicles. The types of businesses that rely on diesel fuel are often providing essential services. Diesel keeps fleets of trucks and commercial vehicles on the road. It powers industrial and agricultural equipment. It also runs the generators in hospitals, nursing homes, and other healthcare facilities—keeping essential equipment up and running when being without power simply isn’t an option. Those generators also protect people and technology by keeping HVAC systems up and running in a variety of businesses.

Whatever business you’re in that relies on diesel, you need a diesel delivery company you can count on. W.H. Riley is that company. We provide dependable bulk fuel delivery. And whether you need skid or bulk tank delivery, our team of trained professionals will deliver when and where you need them to.

In addition to a reliable source of diesel, you also want to know you’re getting real value. W.H. Riley offers competitive prices, but we also add value by providing easy ordering and reliable deliveries. When you need us, we respond quickly so you can stay focused on the business you’re running.

Why Are Fuel Costs Different?

As you may have noticed, the price of diesel has been higher than regular gasoline prices lately. In fact, according to the U.S. Energy Information Administration, the per gallon price of on-road diesel has been higher than that of regular-grade gasoline almost continuously since autumn of 2004. Previously, the cost of diesel used to be lower than that of gasoline except for during the winter months. What’s behind this change? There are three primary reasons: the use of cleaner diesel blends, an increase in state and federal taxes, and an increase in demand for diesel. Let’s take a closer look at each one.

Cleaner Diesel Blends

Several years ago, the EPA instituted rules that limited the sulfur content of diesel fuel. This was done to reduce toxic emissions because the airborne sulfur matter is toxic to humans and other organisms. As a result, the U.S. has transitioned to less polluting diesel fuels with lower sulfur content. That caused an increase in the costs associated with the production and distribution of diesel fuel. Additionally, diesel with a lower sulfur content also has a lower energy density. That means that each gallon offers less fuel economy. As a result of the rise in production and distribution costs coupled with the lower energy density of low-sulfur diesel, prices increased.

Taxes

The taxes applied to the sale of on-road diesel are higher than the taxes applied to the sale of gasoline at the federal level. Currently, the federal tax on on-road diesel is higher than the tax on gasoline by 6 cents per gallon. States also impose their own taxes on on-road diesel fuel. On average, the taxes imposed on the sale of on-road diesel in each state is more than 7 cents per gallon higher than the state taxes imposed on the sale of gasoline.

Demand

The concept of supply and demand is a basic principle of economics. When supply decreases, prices tend to increase. That’s largely because when a resource is in limited supply its real or perceived value increases. Similarly, when demand increases, prices tend to increase as well. When there is a greater need or demand for a resource, its value and therefore its cost increases. If supply decreases while demand is increasing, prices can go up sharply. That’s been the case for diesel of late. The demand for diesel domestically and internationally has been high. Affecting the supply of diesel is the fact that it’s not produced at the same high rate as gasoline. For every barrel of crude oil that’s refined, roughly half as much diesel is produced as compared to gasoline. So it’s in lesser supply.

Whatever the demands of your business, W.H. Riley is here to help by offering the quality your business needs. You can always rely on us.

Contact W.H. Riley & Son today to learn more about our diesel fuel services.