Diesel fuel has always been more expensive than gasoline in the United States. Several factors contribute to this phenomenon, ranging from production rates and taxes to international affairs.
Why Is Diesel More Expensive Than Gas?
Four factors affect diesel prices: supply and demand, refining costs, state and federal taxes, and international trade.
Low Supply and High Demand
While diesel and gasoline are made from the same resources (crude oil and natural gas), gas is produced at a higher rate than diesel.
While diesel and gasoline are made from the same resources (crude oil and natural gas), gas is produced at a higher rate than diesel. A barrel of crude oil only makes about 11 to 12 gallons of diesel, but the same amount can make 19 to 20 gallons of gasoline. This is because diesel is thicker and more concentrated than gas.
Gas sells faster than diesel, so producers tend to prioritize it over diesel even though it actually falls behind diesel in terms of demand.
Diesel and some of its compounds power trucks, heavy machinery, cargo ships, trains, and other industrial machines, while gasoline only powers automobiles. So while gasoline is fueling American cars, diesel is fueling the entire economy.
Diesel fuel has gone even more scarce in the past two years, with the US and China (two of the top diesel refiners in the world) producing at less capacity than their usual numbers before the pandemic. In 2021, diesel fuel prices rose by as much as 43%, while gasoline was limited to 15%.
Towards the end of 2022, US inventory stood at 106.2 million barrels of distillate, which is 20% below the five-year average. This supply is projected to last for only 26 days, according to a report from the Energy Information Administration.
Refining Costs
Diesel fuel actually cost less than gasoline before the US Environmental Protection Agency (EPA) imposed emissions regulations sometime in 2004. This meant that people with diesel-powered cars and machinery got to enjoy the fuel efficiency benefits that came with them at low prices.
But as more diesel vehicles occupied the streets, levels of sulfur oxide, nitrous oxide, and particulates skyrocketed as well一all of which are harmful to humans and the environment.
So to combat this issue, the EPA imposed regulations on oil companies to refine diesel fuel for cleaner emissions. In 2014, the EPA required manufacturers to produce ultra-low sulfur diesel (ULSD), which reduced toxic emissions by at least 90%.
Refining crude oil into a less harmful variant of diesel fuel is a tedious process, which involves mixing detergents and additives that also help clean the engine. Refining diesel fuel can cost around $0.49 per gallon. That can add up to a massive sum during diesel production.
High State and Federal Taxes
Like all commodities, the government imposes taxes on gasoline and diesel. The federal motor fuel excise tax imposes an additional 24.3 cents for diesel fuel per gallon. The average of total state taxes would put this value at 33.45 cents per gallon.
Meanwhile, the tax on gasoline is 18.3 cents, which is significantly lower than diesel. This is because vehicles that have diesel engines, such as trucks, are heavier and are more likely to damage public roads compared to regular automobiles.
Tax revenue from the federal motor fuel excise tax goes to the Highway Trust Fund, which is responsible for maintaining public roads and highways.
The US isn’t the only country that taxes diesel fuel more than gasoline. Switzerland, Mexico, and Iceland also impose higher taxes on diesel. Meanwhile, Iran, Venezuela, Saudi Arabia, and Algeria are among the top countries with the lowest diesel fuel prices.
International Trade
The Organization of Petroleum Exporting Countries (OPEC) plays an important role in determining global oil prices.
Oil is an international commodity that’s traded from different parts of the globe, and anything that affects its price in any country can affect its cost in the US.
The Organization of Petroleum Exporting Countries (OPEC) plays an important role in determining global oil prices. It’s a cartel of 13 countries controlling approximately 78% of the world’s oil supply. OPEC’s command over the oil supply affects the US even though it’s not a member of the organization.
The recent war between Russia and Ukraine also affected oil prices in the US when the president banned oil supplies from Russia from being imported into the country.
Oil, particularly diesel, is fundamental to international transport as well. Vehicles like freight trucks and cargo jets rely on diesel to transport different products. As the prices of these commodities skyrocket because of inflation, so does the cost of diesel.
What Do Expensive Diesel Prices Mean for the Economy?
The effect of high diesel prices isn’t limited to the transportation industry alone. About 75% of farming equipment is powered by diesel fuel, which means food prices can increase at the same rate as diesel fuel.
Kerosene, which shares similar compounds found in diesel fuel, is also set to rise in winter, following the need to keep rural homes and communities warm. Towards the end of 2022, reports claim that the cost of a gallon of kerosene or heating oil will balloon to $7. To keep a house warm, owners will need one to two gallons of kerosene per hour.
Will the US Run Out of Diesel Fuel?
If the country were to run out of diesel fuel, which is still considered a possibility, several industries would stop, freezing global commerce.
With recent reports claiming that the country is set to run out of diesel fuel heading towards winter, experts say that there’s enough fuel to get citizens through the cold season.
The news on the 26-day supply of distillate that has been circulating throughout the country doesn’t necessarily mean that the US will run out of diesel fuel anytime soon. The projected numbers don’t include the amount of distillate fuel being produced in the US or the ones being imported into the country.
If the country were to run out of diesel fuel, which is still considered a possibility, several industries would stop, freezing global commerce.
Get Reliable Diesel Fuel System Parts For Your Vehicle
You can partially compensate for the cost of fuel by ensuring your vehicle’s diesel fuel system runs efficiently. If a part like the diesel injector, diesel injection pump, or diesel primer pump develops an issue, replace it immediately to avoid additional problems that cost more to fix. Get reliable replacement diesel fuel system parts at CarParts.com.
CarParts.com is your one-stop shop for parts and accessories that you can rely on, like diesel injectors, diesel injection pumps, and diesel primer pumps. We exclusively source our diesel fuel system parts from trusted manufacturers, so you’re assured that the new parts will deliver the lasting performance you deserve. Find the products that best fit your unique needs by plugging your vehicle’s year, make, model, and engine into our website’s vehicle selector. Placing an order is similarly straightforward–you only need several mouse clicks or screen taps to finish our secure online shopping process.
Lisa Conant grew up in Canada around a solid contingency of gear heads and DIY motor enthusiasts. She is an eclectic writer with a varied repertoire in the automotive industry, including research pieces with a focus on daily drivers and recreational vehicles. Lisa has written for Car Bibles and The Drive.
The CarParts.com Research Team is composed of experienced automotive and tech writers working with (ASE)-certified automobile technicians and automotive journalists to bring up-to-date, helpful information to car owners in the US. Guided by CarParts.com's thorough editorial process, our team strives to produce guides and resources DIYers and casual car owners can trust.
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