more about gas vs. diesel

Image by Cool Pixels via FlickrNormand Miron was kind enough to provide this link; the discussion of gas and diesel prices is in the comments:

• Diesel demand is relatively constant, while gas demand fluctuates. This means that over the short term fuel companies can raise prices incrementally without losing business.
  
• American use of diesel and gas are out of balance relative to the ratio in which they are typically produced, and as a result there's a shortage of diesel refining capacity without there being a corresponding shortage of gasoline refining capacity.

So there you go: some people blame greed, others blame (other) market forces.

diesel fuel vs. gasoline

Image via WikipediaI'm listening to an old episode of Crosstalk America, where host Vic Eliason interviews E. Calvin Beisner, national spokesman for the Cornwall Alliance for the Stewardship of Creation and author of Where Garden Meets Wilderness: Evangelical Entry into the Environmental Debate.

The first segment moves pretty quickly, touching on global warming, abortion, etc. and most of it I won't rehash here.

Vic asks why diesel fuel is more expensive than gasoline, given that diesel can be refined more cheaply. This is a puzzle: diesel used to be less expensive, but that changed a few years ago. At the top of the recent fuel spike there was nearly a dollar spread between diesel and gasoline locally. Eliason and Beisner more or less agree that taxes are the problem.

The best answer I've found so far is here, a column with Steven Cole Smith interviewing Ted Haberkorn. It's from 2005, as best I can tell, and it says that refining costs for gasoline are lower, taxes are roughly the same percentage of the price: taxes are higher for diesel in dollars, but roughly 16% of the total price:

According to the federal government's Energy Information Administration (EIA) statistics, diesel has been gaining on regular gasoline from about 1994 to the fall of 2004, when, for the most part, diesel became more expensive.

Helpfully, the EIA offers a breakdown of that $3.10-a-gallon diesel from October: 16 percent of the $3.10 goes to taxes, 10 percent to distribution and marketing, 29 percent for refining, 45 percent for crude oil.

Compare that to the breakdown on a gallon of regular gas from October, which cost $2.72. Of that, 16 percent went to taxes, 18 percent to distribution and marketing, 15 percent to refining, 51 percent to crude oil.

The article concludes that hurricanes disrupted supply and refining capacity in 2004, but that the spread was still positive in 2005 because the market would bear it.

Commodity prices are funny things: futures tend to smooth out prices, making supply and prices more stable; I wouldn't be surprised if there weren't a futures-market aspect to diesel vs. gasoline spread, too.