On a dollar-per-gallon basis, on-highway diesel fuel costs have been higher than regular-grade gasoline prices virtually continually since September 2004. This tendency contrasts with the prior historical pattern of diesel fuel prices being lower than gasoline prices, with the exception of harsh winters when demand for heating oil drove diesel fuel prices higher. Diesel fuel costs have been higher than conventional gasoline prices in recent years for three key reasons:
- Diesel and other distillate fuel oils have seen strong demand, particularly in Europe, China, India, and the United States.
- In the United States, the move to less polluting, lower-sulfur diesel fuels had an impact on diesel fuel production and distribution costs.
- On-highway diesel fuel has a federal excise tax of 24.3 cents per gallon, which is 6 cents per gallon greater than gasoline.
This Week In Petroleum delves into the world of petroleum markets. This FAQ topic is covered in greater depth in the May 20, 2009 and March 26, 2008 editions.
Other FAQs about Diesel
- Does the EIA provide state-by-state estimates or projections for energy output, consumption, and prices?
- In the United States, how much biomass-based diesel fuel is produced, imported, exported, and consumed?
- How much carbon dioxide is created by gasoline and diesel fuel consumption in the United States?
- How much does a gallon of gasoline and a gallon of diesel fuel cost?
Is unleaded or diesel more expensive?
The cost of diesel fuel is higher. Historically, diesel fuel has been more expensive than gasoline. Diesel fuel is subject to a higher federal excise tax than gasoline (24.4 cents per gallon vs. 18.4 cents per gallon for gasoline), and diesel fuel is occasionally subject to a higher state tax.
Is diesel always more expensive than petrol?
Despite the fact that the Treasury taxes diesel and gasoline equally, diesel has historically been more expensive than gasoline due to domestic refineries’ inability to satisfy demand. As a result, the UK has been compelled to import diesel at a higher rate than petrol from other countries. Diesel costs are also influenced by the cost of the additives used in the fuel.
How much more expensive is diesel than gas?
Compare the benefits and drawbacks of diesel-powered automobiles if you’re in the market for a new vehicle. Consider the following information while deciding between a diesel and a gasoline engine.
Diesel engines, according to the US Department of Energy, consume 30 to 35 percent less fuel than comparable gasoline engines. Diesel engines, by design, have a leaner combustion process, burning less fuel than a normal spark ignition (gasoline) engine. Diesel has a higher energy density than gasoline, which means it takes less fuel to provide the same amount of power, resulting in better overall fuel economy.
Diesel has cost roughly 14 cents per gallon more than unleaded gasoline over the last ten years. Diesel fuel was more than 76 cents per gallon more expensive than gasoline at its peak. Due to greater taxes and environmental regulations, diesel has historically been more expensive per gallon. Diesel is currently 25 to 50 cents more per gallon than gasoline due to lower fuel prices. Another advantage of gasoline is its accessibility; in some places, stations do not always have a diesel pump. If drivers spend too much time seeking for places to fill up, this could reduce their output.
However, the diesel engine’s higher price must be balanced against its higher fuel economy. The incremental cost of a diesel engine in a Class 3-4 truck is $5,000 to $8,000 or more than its gasoline counterparts. Due to exhaust after-treatment technology developed to comply with Environmental Protection Agency (EPA) rules for diesel emissions, the diesel/gasoline pricing gap has roughly doubled in recent years. The higher strength components of a diesel engine contribute to its higher initial cost. Utilize this rule-of-thumb to see if you’ll be able to recoup the greater initial cost of a diesel vehicle: use the mileage break point of 30,000 annual miles. Diesel usually makes financial sense at that threshold. Gasoline is a possible lower-cost option at or below 30,000 miles. Calculate the payback period for your truck’s application using a fuel-cost/comparison study to see if the diesel engine will save you money in a reasonable amount of time.
Regular maintenance on a diesel engine will cost more in the long run than on a gasoline engine. Components on a diesel engine are either not found on a gasoline engine or require more frequent maintenance. A diesel engine’s oil changes are more expensive and are required more frequently. Filters must be replaced more frequently. Furthermore, gaining access to the engine and its components may take longer, resulting in increased labor costs. Engine oil, spark plugs, and coolant service periods are all greater on gasoline engines. Parts are often less expensive and easier to come by.
Why is it believed that diesel engines will survive significantly longer than comparable gasoline engines? Diesel engines require sturdier engine parts, such as block and cylinder heads, valves, crankshaft, and pistons, due to their high compression ratios and cylinder pressure. This is required to disperse the greater engine temperatures and compression ratios that a diesel engine may achieve. Furthermore, because diesel fuel exhaust is less corrosive than gasoline engine exhaust, a diesel engine’s exhaust system will outlast a gas engine’s exhaust system. Another factor that contributes to the diesel engine’s longevity is its operational efficiency. Because diesel engines produce more torque at lower speeds, they operate at lower rpm for a greater percentage of the time than gasoline engines. The lower the engine speed, the fewer times a piston must rise and fall, the fewer times a valve must close, and so on. All of these things happen frequently, but not as frequently as they do in a gasoline engine, which has an impact on total life.
If towing capacity is vital to your operation, the diesel engine is a better option. Diesel engines’ torque advantage makes them more suited to towing heavy loads up steep gradients. Because of the higher compression ratio required to ignite diesel fuel (17:1 diesel vs. 9:1 gasoline), the diesel engine can generate all of its torque and power at lower rpm. When compared to a gasoline engine, which creates more power the quicker it moves, this gives you more power right off the line. While a gasoline truck may be adequate for certain tasks, utilizing one for heavy towing will usually result in drastically reduced engine life and higher gasoline usage.
Which is preferable in terms of resale value? A diesel-powered truck with 150,000 kilometers on it has far longer remaining useful life than a gasoline-powered truck with similar miles, according to the market. As a result, diesel has a higher price tag. Diesel trucks are required by a wide range of businesses and industries for towing and greater payload. Many of these businesses are smaller and, as a result, have a limited fleet budget; as a result, they will be shopping for older vehicles. This means there’s a better chance of attracting a broader buyer base, increasing demand, and hence commanding higher premiums. Higher resale value Equals longer lifespan, heavier duty parts, and more power.
Is owning a diesel expensive?
Another reason diesel cars haven’t taken off in the United States like they have in Europe is their polluting emissions. In the United States, emission restrictions are substantially tighter. Anyone who has ever driven immediately behind a school bus or construction truck is familiar with the foul odor and heavy soot that these vehicles emit, especially when accelerating from a stop.
Fortunately, today’s diesel cars are substantially cleaner than they were only a few years ago, and they can fulfill all of the government’s pollution standards. Environmentalists will like the fact that they will be utilizing less of the non-renewable fuel source that vehicles require. Some people may explore utilizing biodiesel, which is a viable option, albeit it may reduce engine performance.
However, despite the lower emissions provided by catalytic converters, diesel cars still contaminate the air, especially when accelerating from a complete stop. Carcinogens, soot, and nitrous oxide are among the particles found in these vehicles’ exhaust. You may be better off with a hybrid or electric car if you will be doing a lot of city driving or if you want to buy a vehicle that is healthy for the environment.
- Advantages: More fuel efficient, produce less carbon into the atmosphere, and run considerably cleaner than older diesel engines.
- Carcinogens, nitrous oxides, and soot are released into the air by diesel emissions.
Overall Costs: Saving Money in the Long Run
When it comes to the expense of owning a diesel automobile, the first thing you’ll notice is that they’re more expensive to buy. They cost roughly $700 more than their gasoline counterparts, according to CarsDirect. However, if you retain your vehicle for a long time, you can recoup the majority of this money at the gas pump.
One of the most significant advantages of a diesel engine is its long lifespan, which improves the trade-in and resale value of your vehicle. Indeed, according to Deanna Sclar, author of Auto Repair for Dummies, 2nd Edition, numerous Mercedes-Benz diesel-fueled automobiles have surpassed 900,000 miles on the original engine.
If you intend to retain your automobile for a long time and give it with routine maintenance on a regular basis, you may expect it to save you money in the long term. Buying a diesel car, on the other hand, may wind up balancing out or costing you more in the long run if you are slack on maintenance due to the higher expense of having a diesel mechanic operate on it.
What Are Some of the Best Diesel Vehicles Available Today?
It’s difficult to compare the gas mileage of diesel and gasoline-powered cars because EPA estimates for gasoline-powered cars are typically liberal, while diesel numbers are typically cautious. However, these are the estimated mileages for some of the most popular diesel-powered cars, as well as their gasoline-powered counterparts, on the market today.
According to Edmunds, CarsDirect, Consumer Reports, and AutoTrader, these are some of the most highly recommended diesels:
- Jetta TDI (Volkswagen): The Jetta, a Consumer Reports top pick, gets 35 mpg on average and has a low cost-to-on ratio.
- The Volkswagen Golf TDI has a dynamic suspension, a practical hatchback, and a well-equipped cabin. On the highway, it may get up to 42 miles per gallon.
- The Volkswagen Passat TDI is similar to the Volkswagen Golf but offers more interior room. Edmunds discovered that it routinely tops 40 miles per gallon on the highway during testing.
- Jeep Grand Cherokee EcoDiesel: AutoTrader praises this American-made SUV with a 7,400-pound towing capability. It can “reach 30 mpg highway, providing it best-in-class efficiency,” according to them.
- BMW X5 xDrive35d: Listed as a top pick by Edmunds and AutoTrader, this SUV has significantly more torque and fuel economy than the gasoline-powered version, and its precise handling makes it enjoyable to drive.
Of course, many other diesel vehicles offer excellent quality and gas mileage, so make sure to read evaluations of any you’re considering.
Do You Think a Diesel Is Right for You?
You are the only one who can decide whether or not a diesel car is right for you. These automobiles have the potential to save you a significant amount of money.
An independent agent may not be able to advise you on which sort of automobile is best for you, but once you’ve discovered the perfect vehicle, they can help you obtain a cheap car insurance policy that meets your coverage and budgetary demands.
Is diesel cheaper than gasoline?
Customers who drive a lot of highway miles prefer diesel engines, according to Bell Performance and Road and Track, because they are more efficient on these roads than gas engines. Diesel fuel simply has more energy per gallon than gasoline, making it more cost-effective overall. Diesel engines are still more fuel efficient than gasoline engines, but they are less so for city drivers. Diesel cars also have higher torque, which means they get better gas mileage and accelerate faster.
It’s crucial to keep in mind that some types of diesel fuel can reduce vehicle performance. Black diesel, biodiesel, and other improved diesel products are among them.
Diesel and gasoline are around the same price for most Americans. Diesel can sometimes be more expensive than gasoline, yet it can also be less expensive than gasoline. Even if you pay more on diesel fuel, a diesel engine will still provide better fuel efficiency throughout the life of the car. This is because an 8-liter gasoline engine would be required to produce the same level of power as a 6-liter diesel engine.
Diesel engines, according to Digital Trends, are more durable and endure longer than gas engines, with reliable operation and low maintenance requirements. Diesel cars used to be substantially heavier than comparable-sized gas cars, but thanks to contemporary manufacturing technologies, this is no longer an issue.
Diesel engines also have fewer components than gasoline engines, reducing the number of potential parts that could fail in your vehicle.
Diesel engines often require fewer repair and maintenance services than gasoline engines, resulting in a cost savings.
While early diesel engines had a well-deserved reputation for being noisy, current technology has largely addressed this issue. Noise pollution and dark smoke have been reduced, so if you were concerned about those issues in prior decades, you may wish to reconsider diesel as a viable option. Today, the driving experience in a diesel-powered vehicle is essentially identical to that of a gasoline-powered vehicle.
Is diesel cheaper than petrol?
At the pump, petrol is normally a few pennies cheaper than diesel, but diesel engines are generally more efficient than petrol by a significant margin. That implies a diesel model will almost probably be less expensive to maintain, even if you only go a moderate distance. According to experts, if you drive 10,000 miles a year, a supermini-sized car will save you around £250 in fuel expenditures over three years. If you upgrade to a family hatchback like a Ford Focus or a VW Golf, you’ll save around £500. If you choose a medium-sized SUV like the Nissan Qashqai, you might save around £900 on diesel.
Given the pricing differences, it makes the most sense to choose a diesel if you drive much more miles per year than the typical 10k, and especially if you do so in a larger vehicle. If your mileage is typical, the cost of buying and selling evens out, and there’s usually no financial benefit to buying the more expensive diesel.
The federal excise tax on diesel fuel is 6 cents per gallon higher than the federal excise tax on gasoline (regular-grade) $.184 vs. $.244, both of which include a.1 cent per gallon cost for a leaking underground storage tank.
Furthermore, the average total tax on gasoline in each state is less than that on diesel fuel, as follows: $.306 (gas) vs. $31.92 (diesel) (diesel). Tax rates are effective as of January 1, 2021.
The Market Reaction to Supply & Demand Changes
Crude oil prices, and consequently diesel and gasoline prices, fluctuate as a result of changes in the market’s supply/demand curve, just like any other commodity.
When demand for a commodity increases, basic economics teaches that the price will likely rise to meet the increased demand.
When demand falls, the expected effect is a drop in the price of the item to entice people to buy it while supplies grow as a result of the drop in demand.
The summer travel season is an example of this demand/supply and price interdependence in the case of gas and diesel fuel.
When summer hits, customers (in a typical year) fly across the country for summer vacations, driving up fuel demand.
Refining Costs Have Increased
In the United States, refineries have historically been designed to produce one gallon of diesel and two gallons of gasoline from each barrel of oil.
As a result, when demand for diesel rises, the supply-side of the curve is squeezed, resulting in a price increase merely due to the oil industry’s finite “scales of production.”
While global demand for diesel continues to rise, U.S. diesel production has expanded to fulfill this demand.
Global demand, on the other hand, has resulted in a price increase as a result of increased demand across worldwide markets.
As previously stated, a flurry of rules designed to safeguard the environment from the effects of climate change have increased the cost of producing diesel fuel.
The ULSD (Ultra Low Sulfur Diesel) rules, which stipulate that diesel fuel cannot include more than 15 ppm (parts per million) sulfur, are one of these restrictions.
This regulation applies to all diesel sold in the United States as of December 2010.
Diesel providers have been outspoken about the difficulties of manufacturing ULSD, citing the difficulty of expanding refining capacity as one of the main reasons why diesel is more expensive than gasoline.
Changes to Production Quotas by Global Producers
The Organization of Petroleum Exporting Countries (OPEC) is an abbreviation that stands for Organization of Petroleum Exporting Countries.
They are also in charge of setting oil production targets in order to control oil production among OPEC members, with Saudi Arabia being the main producer and exporter.
OPEC plays a significant impact in the production and pricing of crude oil on a worldwide scale, since its member countries account for over 40% of global crude oil output.
Furthermore, OPEC exports roughly 60% of all petroleum traded on the international market.
Oil production has been affected internationally due to political events occurring at the local level, due to its considerable market share and the fact that most crude oil reserves are located in regions of the world that are prone to political instability.
The Arab Oil Embargo (19731974) shook the crude oil market and was an example of a geopolitical event from the early to mid-1970s.
To deal with the scarcity, many jurisdictions implemented laws that only allowed cars with license plates that ended in an odd number on specific days and vice versa.
Due to newly defined OPEC+ (now a 24-member organization) production limitations, as well as non-OPEC nations’ refusal to increase supply, oil prices begin to rise with major momentum at the end of 2020 (and into the beginning of 2021).
OPEC+ began to fracture internally as worldwide demand for oil plummeted due to the pandemic and travel restrictions.
Saudi Arabia raised output in order to gain market share (over Russia), resulting in a price reduction below $20 per barrel in April 2020.
As a result, members reached an agreement to cut production by 10 million barrels per day.
These prolonged production constraints are likely to put higher pricing pressure on prices, particularly during the traditionally busy summer months and the anticipated end of pandemic restrictions across the country and around the world.
Crude Oil Prices, which are Subject to Fluctuation & Manipulation
The cost of crude oil is the most significant factor in the retail price of diesel fuel.
From 2000 to 2020, the cost of crude oil accounted for almost half of the monthly average cost of retail diesel in the United States.
Crude oil is widely regarded as the most volatile component of the diesel retail price fluctuation.
Because diesel fuel is used by the majority of primary modes of transportation, demand for diesel tends to follow economic patterns.
Professional shippers and oil executives pay close attention to crude oil inventories because they are the most fundamental economic elements that can provide insight into the price of diesel fuel in the near future.
Because demand for refined petroleum products decreased when lockdowns were enacted in the Spring of 2020 when COVID-19 swept the nation and the planet oil inventories soared to some of the greatest levels ever recorded during the pandemic.
With the possibility of a viable vaccine (and the lifting of lockdowns) by the end of 2020, crude oil inventories declined to a 35-day supply still an oversupply, but closer to the five-year average of crude oil inventories of 29 days (see graph above).
Furthermore, as shown in the chart above, crude oil prices did not increase above $60 per barrel until crude oil stockpiles fell below a 27-day supply level.
The Time of Year is a Factor
Fuel prices typically peak around Memorial Day and fall to their lowest point in early February.
While there is an increase in demand for fuel and diesel as a result of consumer vacations and prolonged travel, several production-related factors also have an impact on diesel pricing at this time of year.
The months of April through June are designated by the Environmental Protection Agency (EPA) as a transition season for fuel production.
Because of this surge in demand and the necessity for refineries to modify production processes as they transition from winter to summer mix, it is usually a good bet to expect fuel prices to remain high as we approach (and through) the summer months.
Summer blends have a greater cost because the process takes longer and the final yield/barrel is lower.
However, because both diesel and heating oil are made from the same petroleum distillate, they compete for the same resource in the winter.
How much more expensive is diesel?
When we tested three of Audi’s new diesel models (the A6, A7, and Q5), we consistently outperformed the EPA’s estimates by nearly 10 mpg on the A7.
6. You use the gas station much less frequently.
Diesel is more expensive than conventional gasoline (approximately $0.24 more per gallon, according to AAA’s current estimates), but it has a substantially higher energy content (between 25% and 30%). The new BMW 328d (d for diesel) gets greater mileage than the Smart fortwo coupe, which is fueled by gasoline. It also has 180 horsepower, as opposed to the Smart’s meager 70.
7. Diesel fuel isn’t actually more expensive if you’re buying a high-end car.
When did diesel become more expensive?
The average price of diesel is $3.17. Since September 2004, on-highway diesel fuel costs have been consistently higher than ordinary gasoline prices.
Is buying a diesel worth it?
Diesel engines are similar to gasoline engines in that they use an internal combustion engine to move pistons inside cylinders and then send power to the wheels.
One major distinction between these two types of engines is that gasoline ignites at a higher temperature and requires the help of spark plugs, whereas diesel fuel can ignite just through compression, eliminating the requirement for spark plugs and a distributor.
Diesel fuel is significantly higher in energy density, which means diesel engines are typically 30% more efficient and create more torque than gasoline engines. Buying a diesel-powered automobile is technically worthwhile if you drive more than 10,000 miles per year largely on the highway because diesel engines burn fuel more slowly, resulting in greater efficiency and overall durability.