Saturday, January 18, 2020

Diesel Fuel Prices Explained

By and large, the soaring high diesel fuel prices nowadays are generating a shocking effect on all and sundry. With the impact of recession, nearly all country leaders are calling on the citizens to tighten their belts and be ready for the further distractions that may come along.

A Quick Background

Diesel fuel is named after its creator, Rudolf Diesel, a German engineer. The design was originally patented in the year 1892. Basically introduced to be cheaper than the price of gasoline, diesel has nowadays been subject to the increase in cost. In any part of the globe, diesel is an integral part of the economy. Just like in America, diesel is vital in the people's way of life, the country's economy, as well as its overall security. With its value being openly escalating, USA and the rest of the diesel fuel dependents are somehow downtrodden.

Diesel Fuel and How it is Made

The petroleum diesel is said to be refined and distillated from crude oil. In fact, the No. 2 distillate is the most popularly used among the myriad of types or grades. It is also the principal source of motor diesel fuel as used up in the entire United States. It proves useful in heating the buildings and is utilized by most major industries. After all, it contains low sulfur.

On the other hand, you should have heard about the term "biodiesel". This is another type of fuel which had been unraveled by Rudolf Diesel. It was originally thought of to be rooted from vegetable seed oil. As of the latest technology, biodiesel can be made from animal fats, vegetable oils, and even out of second-hand restaurant grease. Since it is characterized as more nature-friendly, it lessens the emission of carbon monoxide, particulates, and the hydrocarbons. Mixing up 80% of petroleum diesel with 20% biodiesel generally enhances the elimination of sulfur from the diesel fuel engine.

An Explanation on the High Price of Diesel Fuel

You might be wondering why the price of diesel fuel is now more than the price of gasoline. Before, diesel fuel had a lower cost but things have changed. There are factors that affect its price change. They are the following:

The changing season. During the winter season, the demand for the distillate heating oil is up and about so the value of which is also made higher. Talk about the law of supply and demand!

Excise taxes. When the taxes are expensive, then its price also increases.

The value and the worldwide supply of crude oil. The capacity to produce the supply of crude oil along with the assigned value also creates an impact on its price.

The height of refining capacity and international demand. Since the world largely depends on the diesel fuel refineries in the United States, there are times when its capacity ends up too tight thus increasing its cost.

Economic status. Typically the price of diesel fuel is affected by the stability of the economy.

Other factors that affect the diesel fuel prices include the cost of transportation from the refineries and the terminals, the local and regional competition, the costs of equipment, rent, salaries, insurance, local and state fees. So, have you gauged why the value of this much-needed fuel unpredictable?