Why is diesel a lot more expensive than gas, even though it requires less refining than gas?
It’s understandable why many consider diesel to be cheaper than gas because of less refinement. Prices will tell a different story, and the question arises here. Why is diesel a lot more expensive than gas, even though it requires less refining than gas? Different factors cause these differences between gasoline and diesel prices. These include complex refining processes for diesel, higher demands, and huge tax rates at both county and state levels. Read on to learn more!
Why Does Diesel Cost Much More Than Gas?
Diesel is way more expensive than gas, which leaves so many people wondering why. The answer lies in some key factors that affect diesel fueling prices. Below are a few reasons.
Higher Taxes on Diesel Fuel
The tax on diesel at the federal level is around 24.3 cents a gallon, but it’s just 18 cents per gallon for gas. Higher tax rates at the state level also can increase the fuel costs. On average, 34 cents are levied on diesel and 32 cents a gallon of gas at the state level. The government charges more tax on diesel fuel to help collect money for road repairs since heavy diesel vehicles could cause more wear and tear on the roads.
Production or Refining Costs
The United States has introduced strict regulations for diesel fuel. These regulations emphasized the production of ultra-lower sulfur diesel that contains only around 15 parts per million of sulfur. To meet environmental rules, refineries have to remove sulfur from diesel. This takes additional steps during the refinement process, which costs more money. This is why diesel became more expensive to make.
If you need help figuring out which type of fuel works best for your business or fleet, give Howard Energy Inc. a call if you are in need of assistance!
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