The Car and Truck Fleet and Leasing Management Magazine

Why Does Diesel Cost More Than Gas?

October 26, 2005

Diesel fuel, traditionally cheaper than gas, has seen a surge in price over the last couple of months, surpassing the price of regular fuel. There are a few reasons for this, according to a Detroit News report. Hurricanes Katrina and Rita were responsible for a large number of oil refinery closures. Initially, it was gasoline prices that were jumping. But as the refineries slowly return to production, the concentration centers on gasoline, dropping its price while boosting the cost of diesel. Also, as refiners turn to the production of heating oil in the winter months, they manufacture less diesel fuel. So, the price of diesel will go up, even when gasoline prices are falling. There is also competition with the European and Asian markets because diesel use is more popular on those continents. And more trains and trucks – diesel burners – are in use this time of year as the fall harvest is brought to market, the report said. It may take some time, but diesel prices will drop as hurricane-hit refineries reach their previous production levels. A mild winter could also speed up the process.
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