What price economy?

Far be it from me to try and understand fuel pricing.

I don't think the people who set fuel prices understand fuel pricing.

All I know is:

1. Gasoline is still the cheapest liquid you can buy per litre in a service station.

2. If the oil companies can deliver this highly complex product to every street corner at a price lower than water and still make billions of dollars in profit, they should run the entire world. On the off-chance they don't already.

And what I don't know is:

1. How come Diesel fuel is priced so much differently in Canada than in the US?

Last time I looked (last week) gasoline in the US was hovering around the $1.70 per US gallon mark. Diesel was about a dollar per US gallon more - that's almost a 60 percent premium.

The long-distance truckers, virtually 100 percent Diesel users, are understandably irate.

In Canada, the corresponding numbers are about 75 and 90 cents per litre respectively, about a 20 percent hit.

For most of history, Diesel has been cheaper than gasoline. Recently, it has been more expensive.

From what I know, Diesel fuel is a less complex product than gasoline, so from that perspective you'd expect it to be cheaper. The new low-suplhur Diesel fuel (usually labelled 'gold' in most service stations) is trickier, so a price jump wouldn't be considered unreasonable for that stuff.

Also, Diesel comes from the same 'fraction' of a barrel of crude as things like jet fuel and home heating oil.

So you'd figure if there was greater demand for those products, the price of Diesel might rise.

But airlines are cutting back flights everywhere, and a friend of mine in Montreal recently signed a long-term home heating oil contract with his supplier - and the price was lower than last year.

Anybody got any clues?

Comments

[John Betmanis]

Not so many years ago Diesel was cheaper than gas. As far back as I can remember, it was always so. And you are right; Diesel should be cheaper to produce than gasoline and it ought to be cheaper to distribute. What happened?

[Diesel to liquids]

The vast investments are been processed on the Diesel projects. In the vast development the usage of the energy fuels such as the Diesel to liquids are been given more importance and very useful and very easily usable to everyone than other resources.