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Why does Diesel Cost More Than Gasoline?

Updated on June 19, 2013
Many small businesses are affected daily by the high cost of diesel fuel.
Many small businesses are affected daily by the high cost of diesel fuel. | Source

The federal excise tax on gasoline is 18.4 cents per gallon, as compared to 24.4 for diesel. The simple answer to why this disparity exists is that the majority of private consumers owns a gasoline vehicle. Conversely, businesses and governments own diesel vehicles. So, John Q Customer rolls to the pump, and the government allows the price to stay low to keep them happy, but when Bobby Businessman gets there, he just tacks it up to the cost of doing business. Government-based entities don't care because it's not their money.(It was yours.) So, who pays for this higher excise tax? That's right, you... John Q. Customer.

Apples that originate in Washington State are distributed throughout the world by nothing other than Diesel. Commercial boats, trains, and trucks run on mainly diesel, and that cost is rolled into each and every apple in which you sink your pretty pearly whites. But, you don't complain because all you see is the 18.4. Enjoy that 24.4 apple. (Makes you want to drive to the nearest farm to pick up your next bushel of apples, doesn't it?)

Supply and Demand

As with everything, supply and demand affect price. As compared to foreign countries, the US has rather low demand, thus most of our supply gets shipped to other countries where demand is higher. it stands to reason that more supply could stay local, but let's face it, ExxonMobil isn't the "most valuable company" in the world because it gives away diesel fuel. (They just got it yesterday from Apple.)

Unfortunately, many small businesses use diesel on a daily basis, and are affected by the high price of diesel. Just be aware that this is why you may see a fuel surcharge on your bill, which is how some companies pass the cost on to you.

Ultra Low Sulfer Diesel (ULSD)

It's worth noting that ULSD was forced upon the world, and for the better, but still forced. When this happened, the refineries had to drop a pretty penny to upgrade their systems to process it. This wasn't cheap, and they're not going to let you forget it for a long time.


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