Why Is Diesel Fuel More Expensive Than Gasoline?

Written on: February 13, 2023

price of diesel north carolinaBriles Oil & Gas is a diesel fuel provider that understands the various businesses that use our services, and we help them take care of business. We provide courteous and reliable service to our customers in Davidson County and Randolph County.

Briles Oil & Gas has been in business since 1960, and we understand how unique the fueling needs of our customers are. We don’t offer one-size-fits-all diesel delivery. We offer customizable fleet-fueling delivery and service. We bring you what you need where you need it and when you need it. Count on us whether you need on-road diesel, off-road diesel, or both. And because your fueling will come from one source, you’ll find it easier to track your usage and expenses. Free your drivers from the need to spend time and energy logging fuel fill-ups and submitting receipts. Save your staff from some paperwork and processing reimbursements. With on-road and off-road diesel fuel services from Briles Oil & Gas, you’ll save time, energy, and money.

We know you care about your bottom line (and we care about it too), so let’s take a look at some of the trends in diesel fuel costs.

Diesel Now Costs More Than Gasoline

According to the U.S. Energy Information Administration, the per gallon price of on-road diesel has been higher than that for regular-grade gasoline almost continuously since late 2004. Before that, it was customary for the cost of diesel to be lower than that of gasoline except for during the winter.

There are three primary reasons on-road diesel now costs more per gallon than gasoline:

  1. the use of cleaner diesel blends
  2. higher state and federal taxes
  3. an increase in demand for diesel.

Let’s take a closer look at each of the factors affecting the price of diesel versus gasoline.

Cleaner Diesel Blends

A few years ago, the EPA enacted rules that limited the sulfur content of diesel fuel. This was done to decrease toxic emissions, because airborne sulfur matter is toxic to humans and other living creatures. As a result of those new rules and regulations, America is now using less polluting diesel fuels with a lower sulfur content. There was an associated increase in the costs to produce and distribute the lower sulfur diesel fuel. Additionally, diesel with a lower sulfur content has a lower energy density. That means that each gallon of lower sulfur diesel offers less fuel economy than diesel with a higher sulfur content. The combination of the rise in production and distribution costs coupled with the lower energy density of low sulfur diesel led prices to increase.

Higher Taxes

The federal taxes applied to the sale of on-road diesel are higher than the federal taxes applied to the sale of gasoline. States also impose their own taxes on on-road diesel fuel. On average, the taxes imposed on the sale of on-road diesel in each state is more than 7 cents per gallon higher than the state taxes imposed on the sale of gasoline.

Greater Demand

Supply and demand are basic economic principles. Both tend to have a noticeable effect on prices. When supply decreases, prices tend to increase. That’s largely because when a resource is in limited supply, customers are willing to pay more for it. Similarly, when demand increases, prices also tend to increase. When there is a greater need or demand for a resource, its value and therefore its cost increases. If supply decreases while demand is increasing, prices can go up dramatically. That’s been the case for diesel in recent years. The demand for diesel both domestically and internationally has gone up. Furthermore, diesel is not produced at the same high rate as gasoline. So it is always in lesser supply. For every barrel of crude oil that’s refined, roughly half as much diesel is produced as compared to gasoline.

Briles Oil & Gas

If you’re looking to save time and money and get reliable fleet fueling, trust Briles Oil & Gas with your diesel fuel services. From Star to Level Cross and everywhere in between, you can count on us to deliver.

Contact Briles Oil & Gas today to learn more or to put us to work for your business.