Written on: August 28, 2023
Diesel fuel can offer greater cost-effectiveness for specific vehicles or equipment due to the superior fuel efficiency of diesel engines compared to gasoline engines.
Managing diesel costs can be challenging, as diesel prices can fluctuate a great deal. This can have a dramatic impact on your Northeast Wisconsin business’ operating costs.
Dale Gas & Oil has been providing commercial fuel services to area businesses for more than 75 years. Our top-quality diesel fuels are made even better with Schaeffer’s premium diesel-fuel additives. The additives offer numerous advantages, such as increased cetane levels, enhanced horsepower, improved mileage, and continuous moisture and bacterial control. To optimize flow and moisture control during the cold season, we rely on Schaeffer’s winter premium additives.
We offer reliability in diesel delivery service that can’t be matched. Our experience gives us the ability to provide personalized delivery service.
Variation of diesel fuel prices can be attributed to multiple factors. To gain a more comprehensive understanding of the current pricing, let’s delve deeper into the subject.
There are several factors that can contribute to a change in diesel fuel prices, including global demand, production costs, taxes, and government regulations. These elements have an impact on the overall pricing dynamics of diesel fuel.
Supply and demand: As the demand for diesel fuel surges worldwide, its price follows suit. This correlation can be attributed to various factors such as increased economic activity and transportation requirements. Given the continuous growth of the global economy, the demand for diesel fuel is expected to remain high. While the current supply meets the demand, potential supply disruptions resulting from political tensions and other factors can trigger price hikes if the supply becomes limited.
Taxes and regulations: These can drive up the cost of diesel fuel, resulting in higher prices for consumers. Various regulations, such as those related to the environment and safety, can impact production costs. In the United States, the federal excise tax on diesel fuel is 24.4 cents per gallon, higher than the 18.4 cents per gallon for gasoline. Additionally, certain states may impose additional taxes on diesel fuel.
Refining, production, and distribution costs: The process of converting crude oil into diesel fuel involves various expenses, including refining, transportation, and distribution. Any increase in these expenses, such as those resulting from refinery maintenance or upgrades, can lead to higher diesel fuel prices. Additionally, labor costs and other overhead expenses can impact crude oil production costs, further contributing to the rise in diesel fuel prices. Between 2006 and 2014, the Environmental Protection Agency (EPA) implemented stricter sulfur regulations for diesel fuel with the aim of reducing emissions. According to the new standards, diesel fuel cannot contain more than 15 parts per million of sulfur, a significant reduction from the previous 5,000 ppm standard. While this has undoubtedly improved air quality and the environment, it has also led to increased refining costs for diesel fuel.
Crude oil pricing: Recent increases in crude oil prices is caused by a combination of increased global demand, supply disruptions such as extreme weather impacting refining and distribution centers, and geopolitical tensions. Diesel fuel is a blend of refined crude oil and biomass materials, which means that the cost of diesel fuel is interconnected with the price of crude oil. This is because diesel fuel is derived from the refining process of crude oil. It is noteworthy that the production of diesel from crude oil has a lower yield in comparison to gasoline. From a single barrel of crude oil, only 11 to 12 gallons of diesel can be produced, whereas 19 to 20 gallons of gasoline can be obtained.
Partner with Dale Gas & Oil for your commercial diesel fuels requirements. Get in touch with us today for a consultation.