Diesel Fuel Explained: May 05 2022

DIESEL FUEL EXPLAINED (EIA)

Factors affecting diesel prices

The retail price of a gallon of diesel fuel reflects the costs and profits (or losses) of producing and delivering the product to customers. Four main components contribute to the retail price of a gallon of diesel fuel:

The cost of crude oil purchased by refineries
Refining costs and profits
Distribution, marketing, and retail station costs and profits
Taxes (federal, state, county, and local government

NOTE: (April22-May22) United States has exported an average of 6.3 million barrels of fuels per day (bpd), up 22% from the year-ago period, while its imports of fuels have dropped by 14% in that same time period.

This action has tightened refined product stocks in the United States and increased prices as well. This is the domestic oil companies actions doing this NOT the administration. No administration controls the price of fuel, the oil companies and commodity markets do more harm to your pocket and have for decades. This is an excellent example of domestic oil companies NOT keeping inventories up to meet U.S. demand and guess who pays for it – You and Me!!

What happened to my diesel fuel discount?

We get numerous calls from drivers asking, “Did we lose our discounts”? The answer is no!

Your discounts are based on the wholesale base cost plus or minus a fee so when wholesale prices jump like we’ve seen during the last 45-days or so your discount will be effected. During bumping times this is when the “Fueling Strategies” are so important to help you plan when and where to buy your fuel.

Why does the wholesale price effect my cost of the fuel?

Let’s say the wholesale cost of fuel jumps $.40 cents per gallons. The wholesale price of fuel is what the retailer pays for fuel then sells to us with a plus or minus cents per gallon factored into the cost.

Here’s what happens when wholesale prices rise”

Tuesday retail price per gallon is $5.659 and with your discount you paid $5.0090, saving $.65 cents per gallons.

Wednesday retail price per gallon stays at $5.659 but today the wholesale price goes up $.40 cents per gallons and retailer pays more for the fuel. This added cost is passed on to the driver so with your discount you now pay $5.409, saving only $.15 cents per gallon.

Thursday retail price per gallon stays at $5.659 but today the wholesale price goes down $.75 cents per gallons and retailer pays less for the fuel. This lower cost is passed on to the driver so with your discount you now pay $4.909, saving $.75 cents per gallon.

What are the components of the retail price of diesel fuel?

The cost of producing and delivering diesel fuel to consumers includes the costs of crude oil, refinery processing, marketing and distribution, and retail station operation. The retail pump price reflects the costs and the profits (and sometimes losses) of the refiners, marketers, distributors, and retail station owners. The relative share of these cost components to the retail price of diesel fuel varies over time and varies among regions of the country.

The retail price at the pump also includes federal, state, and local taxes. The federal excise tax for on-highway diesel fuel is 24.30 cents per gallon, and the federal Leaking Underground Storage Tank fee is 0.1 cents per gallon. As of January 1, 2022, the average of total state taxes and fees for on-highway diesel fuel was 32.66 cents per gallon. Sales taxes, along with taxes applied by local and municipal governments, also contribute to the final selling price of diesel fuel. Local market conditions and factors such as the location of the fueling station can also affect retail diesel fuel prices. Some retail outlets are owned and operated by refiners, while others are independent businesses that purchase diesel fuel for resale to the public.

Why are diesel fuel prices higher than gasoline prices?

Before 2004, the average price of diesel fuel was often lower than the average price of regular gasoline. In some winters when the demand for distillate heating oil was high, the price of diesel fuel rose above the gasoline price. Since September 2004, the price of diesel fuel has been generally higher than the price of regular-grade gasoline throughout the year for several reasons. Worldwide demand for diesel fuel and other distillate fuel oils steadily increased, with strong demand in China, Europe, and the United States. In the United States, the transition to ultra-low sulfur diesel (ULSD) fuel affected diesel fuel production and distribution costs. In addition, the federal excise tax on diesel fuel is 6 cents higher per gallon than the federal excise tax on regular-grade gasoline.

Have a Great Day,

Loren R Bailey, President

Office: 479-846-2761

Cell: 479-790-5581

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As always, thank you so much for being a part of the Fuel Manager Services, Inc. family, and we look forward to making this the best year yet!

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Market Close: May 05 Mixed, Diesel Down 15.5 Cents »

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Categories: Fuel News

loren: Fuel Manager Services Inc. "Serving the trucking industry since 1992" I've been in and around the trucking industry for 45-years beginning in owner operator operations at Willis Shaw Express. I bought a small trucking company that I ran for 6-years then sold and went to work for J.B. Hunt Transport in 1982. After 10-years with Hunt, I started Fuel Manager Services, Inc., we are in our 29th year of serving the American trucking companies. Our simple goal was and is to bridge the gap between the trucking companies and the fuel suppliers.