I read an interesting article no too long published on the Bio-diesel magazine regarding the current price of diesel fuel. We all know that historically diesel fuel has been cheaper than gasoline; well that is simply not the case these days; more on that below. We have also seen a lot of small business owners taking the plunge to purchase storage tanks (UL-142) and buying fuel in bulk; big $$$ savings.
The article explains the situation as follows: I will be quoting from the September 8th, 2008 Bio-diesel Magazine.
“Going back to 2004, diesel was always less expensive than gasoline. About that time you see this confluence of factors in the global market that changed this. For a consistent number of years, we were exporting distillate fuels [1], to Europe t satisfy their demands, and they were exporting gasoline to us to satisfy our demand, so we had a situation where diesel fuel prices were typically less than or on parity with gasoline on a consistent basis. In the developing countries, their appetite for distillate products is now the major determinate for where the price is today, with the crude price being at the heart of that. Distillate fuel is a much more global fuel than gasoline.
Us gasoline demand in May was down 1.4% from a year ago, according to the API [2], which stated this was the first gasoline demand drop for the January-May period since 1991. On the contrary, May deliveries of distillate fuel oil rose 5.5% from May 2007 to a record setting 4.3 M barrels per day for the month. API says the reason for this was a big rise in low-sulfur diesel demand. The demand for Jet A fuel also rose more than 5% in May. If you have an entire refining system in the U.S. that is optimized to produce gasoline but the demand for gas isn’t there so much, and the demand for diesel is really high but the supply is not that great, that’s going to lead to a price run-up.”
[1] Ditillate Fuels=The principal distillate fuels according to API, are:
Automotive fuels for diesel engines
Automotive gas oil (AGO)
Automotive diesel fuel (DERV)
Diesel fuel No. 2
Railroad engine gas oil
Heating oils
Domestic heating oil
Industrial heating oil
Industrial gas oil
No. 2 fuel oil
Marine fuel
Distillate marine diesel fuel
[2] API=American Petroleum Institute http://www.api.org/
Hello. I was reading someone elses blog and saw you on their blogroll. Would you be interested in exchanging blog roll links? If so, feel free to email me.
Thanks.