The cost-effectiveness of diesel fuel for certain vehicles or applications can be attributed to the fuel efficiency of diesel engines when compared to gasoline engines.
However, the prices of diesel fuel are subject to fluctuations due to various reasons. To understand the current situation with diesel pricing, let’s examine it more closely.
There are several factors that contribute to an increase in diesel fuel prices, such as worldwide demand, production expenses, taxes, and government policies.
Supply and demand: Generally, diesel fuel prices tend to rise when global demand increases or when production costs increase. Diesel fuel demand is currently increasing due to increased global economic activity and the need for transportation. Additionally, the demand for diesel fuel is expected to continue to rise in the coming years as the global economy continues to grow.
The world’s diesel fuel supply is currently adequate to meet global demand. However, supply disruptions due to geopolitical tensions and other factors can cause supply to become tight, resulting in higher prices.
Taxes and regulations: Taxes and regulations both affect the cost of diesel fuel by increasing the cost of production, making diesel fuel more expensive for consumers. Regulations can include environmental regulations, safety regulations, and other regulations that increase the cost of production. The federal excise tax for diesel fuel is higher than that for gasoline at 24.4 cents and 18.4 cents per gallon, respectively, in the United States. Some states also have their own diesel fuel taxes.
Refining, production, and distribution costs: The process of refining crude oil into diesel fuel incurs costs, including refining, transportation, and distribution. If these costs increase, such as due to maintenance or upgrades at refineries, it can contribute to higher diesel fuel prices. Additionally, the cost of labor and other overhead costs can also affect the production costs of crude oil, which in turn contributes to the rise in diesel fuel prices. From 2006 to 2014, the Environmental Protection Agency (EPA) gradually implemented stricter sulfur regulations for diesel fuel in order to reduce emissions. According to the new standards, diesel fuel can contain no more than 15 parts per million of sulfur, a significant decrease from the pre-2006 standard of 5,000 ppm. This change has positively impacted air quality and the environment, but it has also increased refining costs for diesel.
The price of crude oil is currently rising due to increased global demand, supply disruptions, and geopolitical tensions. Additionally, the US dollar exchange rate can also have an impact on diesel prices. More recently, the U.S. dollar has weakened, which contributed to the rise in crude oil prices.
What does this mean for diesel customers? Diesel fuel is a blend of refined crude oil and biomass materials. In other words, because diesel fuel is produced by refining crude oil, the price of diesel fuel is directly affected by the cost of crude oil. Diesel has a lower yield than gasoline when produced from crude oil. One barrel of crude oil can only produce 11 to 12 gallons of diesel, whereas 19 to 20 gallons of gasoline can be produced.
If your Central Maine business uses diesel-powered vehicles and equipment, you know how important it is to have reliable diesel fuel delivery and service to avoid budget constraints and ensure successful completion of all your work.
While we cannot control production costs, taxes, and diesel demand that impact pricing, our on-road and off-road diesel fuel services can still help improve your business’s efficiency and productivity. By doing so, your bottom line improves.
At Murray-Heutz, we highly value our partnerships and strive to provide more than just competitive prices. Our focus is on providing actual value to our commercial customers. We offer hassle-free delivery of bulk diesel fuel directly to your business or job site.
We are a local business providing diesel fuel services that larger national firms cannot offer. We take pride in offering personalized and prompt services. If you need emergency fuel delivery or want to adjust your fuel supply, we are here to help.
Get the dependable diesel fuel services your Central Maine business deserves. Contact Murray-Heutz today to set up a consultation.