Niagara Gazette

Columns

December 12, 2013

TOM'S CORNER: The ins and outs of diesel fuel

(Continued)

Niagara Gazette — Diesel fuel pricing

Through 2004, the national average price of diesel fuel was usually comparable to, or slightly lower than that of regular grade gasoline. However, since 2005 diesel fuel has been consistently more expensive. The U.S. Energy Information Administration identifies several reasons for this change:

n High worldwide diesel fuel demand for both vehicle and industrial use. While U.S. gasoline consumption has declined 5 percent since 2004, diesel demand has increased 29 percent.

n Limited diesel fuel refining capability. The U.S. refining infrastructure is optimized for gasoline production. Increasing diesel fuel output requires significant and expensive refinery upgrades. While domestic demand for diesel is up 29 percent, production has risen just 15 percent.

n Ultra low sulfur diesel fuel production required approximately $8 billion in refinery upgrades. This added an estimated 5 to 10 cents per gallon to the pump price of diesel fuel.

n The federal excise tax for on-highway diesel fuel of 24.4 cents per gallon is 6 cents per gallon higher the gasoline tax. The last increase was in the early 1990s.

n Diesel fuel sold for off-road use (farm tractors, construction equipment, etc.) is not subject to federal and state excise taxes and therefore costs less. To help prevent unauthorized use, these fuels are dyed red for easy identification. Anyone caught using off-road diesel fuel in an on-highway vehicle is subject to fines that can run into thousands of dollars. In addition, diesel sold for off-road use can be either LSD or ULSD. The use of LSD in a 2007 or newer diesel engine certified for highway use will damage expensive emission control components and void the factory vehicle warranty.

Diesel fuel availability

The popularity of diesel pickups and the growing number of passenger cars with diesel engines has led to an increase in the number of gasoline stations that sell diesel fuel; between 40 and 50 percent of all stations now have diesel pumps. In the past, most diesel pumps were found at truck stops along major highways or in rural areas where farmers used diesel trucks and equipment. Today, it is not uncommon for the neighborhood gasoline station to offer diesel as well.

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