Diesel unlocks its efficiency potential by delivering 15% more energy per drop when compared to gasoline.
On average, diesel engines are 30% more fuel efficient and can reduce fuel stops by 20% compared to a gasoline engine.
Diesel is also more prevalent because it is now available at 52% of U.S. filling stations.
Given diesel’s advantages in efficiency and mileage ratings, where is diesel use headed in the United States, and what are some of the factors mitigating its broader expansion into the market?
A major factor related to diesel use is its cost. The major component of diesel fuel, crude oil, accounted for 57% of the U.S. retail on-highway diesel fuel price from 2004 to 2014. In addition, a 42 gallon barrel of crude produces only 10 to 13 gallons of diesel, as opposed to 18 to 21 gallons of gasoline.
Since September 2004, diesel prices have been higher than gasoline prices—a break from the historical pattern where gasoline prices were higher. Over the last five years, diesel prices have followed the fluctuations in crude oil prices.
The main factors contributing to higher diesel prices are higher global demand across Europe, China, India, and the United States; the transition to ultra-low sulfur diesel and its impact on production and distribution costs; and the fact that the federal excise tax for on-highway diesel fuel of 24.4 cents/gallon is 6 cents per gallon higher than the gasoline tax.
The price of diesel is also increasingly affected by the growth in international demand for distillate fuel (heating oil and diesel fuel). In Europe, demand for diesel fuel has grown; diesel-fueled vehicles now account for more than half of new car and light-duty truck sales. Europe uses about a fourth of the world’s distillate fuel, so it is a significant contributor to world distillate demand. In China, heavy-duty vehicle use of diesel fuel has further increased distillate demand. Globally, the use of distillate fuel for electric power generation in many parts of world also has increased demand.
Despite the cost increase, diesel fuel will continue to be an important part of the U.S. fuel mix. According to the U.S. Energy Information Agency, United States distillate fuel prices should rise by 23% through 2040, compared to an 11% increase for motor gasoline. However, distillate fuel consumption should increase by 15%, compared to a 20% decrease in motor gasoline consumption during the same period.
All of this makes one thing clear: The United States will need to continue investing in its refining and distribution infrastructure as diesel use continues to rise.
Source: U.S. Energy Information Administration - Energy Prices
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