Why is Diesel More Expensive
Six years ago I decided to buy a minivan for my growing family. Well now it continues to grow with the addition of my son Jason. So, was it time for a larger minivan. My wife drove the hell out of the Odyssey. With the high cost of gasoline, a full sized van was out of the question. Also, you-know, my wife is tired of the soccer mom look. The VW Passat wagon was the vehicle of choice. It is a diesel...34 mpg. Only one problem. Diesel is $3.00 a gallon verses $2.25 for gasoline.
Why the hell is this? Diesel takes less refinement!
After talking with a buddy of mine who works as a chemist for a refinery, I found out why. It is true that diesel does take less to refine. But it's the supply demand thing; how much diesel vs. gasoline a refiner can generate from a barrel of crude.
So what is a barrel anyway and what's in it. Answer, it's crude oil, black gold...marvelous stuff. A refinery runs on the vary product it produces.
Anyway, one barrel crude oil contains 42 gallons of said crude. The total volume of resulting products made from a barrel of crude oil is on average 48.4 gallons, 6.4 gallons greater than the original 42 gallons of crude. This is a gain from processing because of the addition of other petroleum products such as alkylates which are added to the refining process to create the final products.
So, the above shows amount of gasoline verses diesel derived from a barrel of oil. This explains why diesel is more expensive. The demand is high not only because of all of those diesel cars, but also because of trucking and heavy equipment usage. The demand for diesel drives up the cost. The supply is determined by the available of crude. And at $85 a barrel, the explanation becomes clearer. You better hope Iraq comes on line soon.
Bill M. November 2008
*Note. Refinery gas is used to power the distillation towers (boil the crude oil), which is part of the the refinement process.