The recent increase in petrol prices, people have another reason to opt for alternative means of transport. Increased cost of gas, using May, motivated many people clamor for alternative forms of transport would enter an era in which people no longer have to depend much on the so-called oil industry.
But with the shift to find alternative sources of transportation, many researchers have begun to interact with other types of alternative fuels for future cars. One of the most attractive and in fact the most attractive approach is to use hydrogen power to run the machines. It will be only temporary until the hydrogen battery vehicles will be used as the primary traffic on the streets. BTU, what is it?
Hydrogen cars are relatively new type of vehicle with hydrogen as its main on-board fuel. Hydrogen cars are not different from conventional cars that there is another type of engine to move the vehicle. There are two ways that this is possible.
This type of hydrogen car from the combustion of hydrogen fuel, like what happened with the gasoline engine. Hydrogen engine is actually a modified version of the traditional gasoline internal combustion engines. This process takes place in May, largely the same as the number of combustion of hydrogen gives explosive power, the engine produces mechanical energy to move the car.
The tangible benefits of hydrogen power vehicle, sees that it is using clean fuel source for power. This means that the use of hydrogen as a fuel makes it less environmentally harmful substances and chemicals emitted into the atmosphere. Indeed, the hydrogen car concept was implemented, as researchers have opted for a cleaner alternative fuels for use in the future to replace oil. And it is clear that hydrogen is suitable bill quite nicely.
Another type of hydrogen car developed today makes use of hydrogen fuel cells to power instead of specialized internal combustion engine. In this set-up, hydrogen is used to generate electricity and that can be used to the car of an electric motor. So emissions avoided entirely, unlike a car with the internal combustion engine (ICE) that run on hydrogen.
Although the use of hydrogen fuel cells Eye is to have a better chance for hydrogen cars energy in the future, May next plan still some obstacles. One of them, hydrogen fuel cells are too expensive to deal with existing technologies. Not only that hydrogen fuel cells also usually very vulnerable and sensitive to vibration and sudden movements. Engineers are still trying to develop and type of hydrogen fuel cells, which are strong enough to withstand the vibrations often strike, which usually comes with traveling by car. And at the same time, it would be necessary for a better and more affordable technology for the manufacture of hydrogen fuel cells, to make it cheaper for consumers.
But despite the problems that have so far on the development of a hydrogen car, his future remains very bright. What makes it especially attractive vehicles hydrogen batteries so that hydrogen is a renewable source of energy. This is unlike fossil fuels, which takes place sooner or later, and could lead to even greater increases in the price of gasoline. Hydrogen cars would be the logical alternative to the world searching for a means to move away from too much dependence on fossil fuels.
Suggested Reading:
+ Combating High Diesel Fuel Prices
Tuesday, December 23, 2008
Sunday, December 14, 2008
Diesel Fuel Prices to Skyrocket - Water as the Next Best Option
The title says it all, and here's why: first of all, everyone's feeling the pinch of fuel prices. And it's not just the average Joes, it's everyone. Yes, even those who are high up in the economic world -- those who own airlines, investment companies, real estate, you name it. We're hearing about airlines asking passengers to pay for their airline food so they don't have to raise prices. Investment companies are crashing in the United States and the whole world feels the earth quake. Real estate firms are closing down buildings and liquidating their funds to stay afloat. All this because of diesel fuel prices.
If people were a tad ambitious or daring, we could go for something that has been proposed a few years ago as an alternative to diesel fuel -- water. First of all, it makes the car start and run. That's the most important thing we need to consider when dealing with alternative fuels. Second, it's inexpensive as compared to gasoline or diesel. Even if we say that gasoline is cheaper than diesel, there is still a substantial difference between using gasoline or diesel and using water. There may be some power technicalities, and car aficionados who love racing would attest to that, but the reality is that it works. Surveys show that people would consider using water as fuel for their cars if it means saving buckets of money that goes to the cashier at the gas pump.
The concept of water being used as fuel is simple. You will be using Hydrogen gas or H2 gas instead of diesel fuel or gasoline. Right now, technology still doesn't permit us to utilize 100% Hydrogen gas on a car. It is usually mixed with a little bit of diesel, but still it reduces the money you'll have to pay for diesel fuel. When you use the hybrid of diesel and hydrogen gas in your car, your car runs efficiently and it will get you to where you need to go.
How does water fuel come about? Here's a quick look at the science behind this amazing piece of technology. Electrolysis is the process by which water is converted to usable hydrogen gas. The device that initiates the electrolysis gets its power from the car's battery -- the circuit is fired up and hydrogen gas is ready to go. The gas is then released into the engine's air intake system where it travels through the combustion chambers and mixes with a little bit of diesel. This economical mixture of hydrogen gas and diesel makes for a perfect combination that maximizes the car's mileage and saves you gas money which is essentially the whole point of using alternative fuels.
You may think that there will be some complicated mumbo jumbo that you need to figure out before your car can run on water, but it's really easy to set up. Just make a visit to the hardware store, get all the things you need, come back home, get on the internet, and search for step by step instructions. That's basically all you need to do to save on gas money. Soon enough you'll see your savings skyrocket as high as the diesel fuel prices themselves.
If people were a tad ambitious or daring, we could go for something that has been proposed a few years ago as an alternative to diesel fuel -- water. First of all, it makes the car start and run. That's the most important thing we need to consider when dealing with alternative fuels. Second, it's inexpensive as compared to gasoline or diesel. Even if we say that gasoline is cheaper than diesel, there is still a substantial difference between using gasoline or diesel and using water. There may be some power technicalities, and car aficionados who love racing would attest to that, but the reality is that it works. Surveys show that people would consider using water as fuel for their cars if it means saving buckets of money that goes to the cashier at the gas pump.
The concept of water being used as fuel is simple. You will be using Hydrogen gas or H2 gas instead of diesel fuel or gasoline. Right now, technology still doesn't permit us to utilize 100% Hydrogen gas on a car. It is usually mixed with a little bit of diesel, but still it reduces the money you'll have to pay for diesel fuel. When you use the hybrid of diesel and hydrogen gas in your car, your car runs efficiently and it will get you to where you need to go.
How does water fuel come about? Here's a quick look at the science behind this amazing piece of technology. Electrolysis is the process by which water is converted to usable hydrogen gas. The device that initiates the electrolysis gets its power from the car's battery -- the circuit is fired up and hydrogen gas is ready to go. The gas is then released into the engine's air intake system where it travels through the combustion chambers and mixes with a little bit of diesel. This economical mixture of hydrogen gas and diesel makes for a perfect combination that maximizes the car's mileage and saves you gas money which is essentially the whole point of using alternative fuels.
You may think that there will be some complicated mumbo jumbo that you need to figure out before your car can run on water, but it's really easy to set up. Just make a visit to the hardware store, get all the things you need, come back home, get on the internet, and search for step by step instructions. That's basically all you need to do to save on gas money. Soon enough you'll see your savings skyrocket as high as the diesel fuel prices themselves.
Saturday, December 13, 2008
Projection for Diesel Fuel Prices
For as long as the prices of crude oil and the demand for distillate fuels are maintained at a high level, the retail diesel fuel prices will in most likelihood be high, too. The Energy Information Association (EIA) has released a report on what is likely to happen for remainder of 2008 and 2009 for the United States. It states that the national average retail prices for diesel fuel will reach its highest point during the third quarter of 2008 then it will decline by the fourth quarter of 2009.
However, these are just projections; hence, there is no assurance or guarantee because it can be greatly affected by the instability and unpredictability of the prices of crude oil and petroleum products. Among the many factors that affect the prices, below are the main ones that are faced by United States, especially the West Coast countries:
The Effect of Sulfur on Prices
The Environmental Protection Agency (EPA) standards for diesel fuel sulfur content can also alter the prices for diesel fuel. What needs to be taken into consideration is the logistics of delivery of the Ultra-Low Sulfur Diesel (ULSD) fuel to retail service stations. Most of these products are transported via pipelines to reach the bulk terminals then to tanker trucks then finally to the retail stations. Contamination may happen to the ULSD fuel because these pipelines, storage, and local distribution systems also serve to deliver other diesel fuels and petroleum products, which have higher sulfur content. If a batch of ULSD fuel gets contaminated, it might not be an option to mix it with additional low-sulfur product to bring back its sulfur content to the original level. The contaminated batch has to be returned to get reprocessed in a refinery, and this solution is a difficult and expensive one. More so, the production of ULSD fuel entails a big expense to begin with. So any problems that might arise along the way with regard to delivery will just add up to the expense.
Geography and Taxes
Another factor that affects the prices of diesel fuel in the United States is the geography. West Coast countries have generally higher prices than the other parts of the country. This holds true especially for California because of the taxes and issues on the supply. These countries add more tax—that is, they combine the state and local taxes, and add another tax value on top of the federal excise tax and state tax. Washington is one of the countries that have the highest tax.
Geography and Relief Supplies
The West Coast countries also have higher prices for diesel fuel because they have relatively fewer supply sources. Because majority of the refineries in this region are located in California, a single refinery that encounters difficulties in operations will greatly affect the diesel supply. In turn, this may elevate the prices because there will be fewer supply to meet the high demand. More so, the West Coast is very far from the Gulf Coast and other foreign refineries—that is, any fluctuation on supply-demand will generally result in price fluctuation because it will take some time to transport relief supplies to these countries. The farther the relief supplies are, the higher the diesel fuels prices will be and the longer it will remain at such price.
However, these are just projections; hence, there is no assurance or guarantee because it can be greatly affected by the instability and unpredictability of the prices of crude oil and petroleum products. Among the many factors that affect the prices, below are the main ones that are faced by United States, especially the West Coast countries:
The Effect of Sulfur on Prices
The Environmental Protection Agency (EPA) standards for diesel fuel sulfur content can also alter the prices for diesel fuel. What needs to be taken into consideration is the logistics of delivery of the Ultra-Low Sulfur Diesel (ULSD) fuel to retail service stations. Most of these products are transported via pipelines to reach the bulk terminals then to tanker trucks then finally to the retail stations. Contamination may happen to the ULSD fuel because these pipelines, storage, and local distribution systems also serve to deliver other diesel fuels and petroleum products, which have higher sulfur content. If a batch of ULSD fuel gets contaminated, it might not be an option to mix it with additional low-sulfur product to bring back its sulfur content to the original level. The contaminated batch has to be returned to get reprocessed in a refinery, and this solution is a difficult and expensive one. More so, the production of ULSD fuel entails a big expense to begin with. So any problems that might arise along the way with regard to delivery will just add up to the expense.
Geography and Taxes
Another factor that affects the prices of diesel fuel in the United States is the geography. West Coast countries have generally higher prices than the other parts of the country. This holds true especially for California because of the taxes and issues on the supply. These countries add more tax—that is, they combine the state and local taxes, and add another tax value on top of the federal excise tax and state tax. Washington is one of the countries that have the highest tax.
Geography and Relief Supplies
The West Coast countries also have higher prices for diesel fuel because they have relatively fewer supply sources. Because majority of the refineries in this region are located in California, a single refinery that encounters difficulties in operations will greatly affect the diesel supply. In turn, this may elevate the prices because there will be fewer supply to meet the high demand. More so, the West Coast is very far from the Gulf Coast and other foreign refineries—that is, any fluctuation on supply-demand will generally result in price fluctuation because it will take some time to transport relief supplies to these countries. The farther the relief supplies are, the higher the diesel fuels prices will be and the longer it will remain at such price.
Friday, December 12, 2008
Combating High Diesel Fuel Prices
With the gasoline and diesel fuel prices increasing, people have come up with various solutions to go around this situation. One of these solutions is the use of diesel fuel additives. Primarily they are known to increase lubricity of fuel, hence decreasing the wear and tear of engine parts. What is more is that it also can increase gas mileage.
Being a highly complex fuel, diesel fuel’s chemical structure changes from the time it leaves the refinery to the time it is pumped into holding tanks and fuel station to the time it gets pumped into the vehicle. Oxidization and structural changes occur in the fuel molecules. The energy per unit volume of the fuel can change during this phase, and this is what will cause your engine to have poor performance.
To combat the effects of fuel degradation and increase the fuel’s cetane value (discussed in detail below), the right type and ratio of fuel additives have to be used. Among a myriad of benefits, the engine will be able to obtain more power from a gallon of fuel.
Diesel fuel has more energy per gallon as compared to gasoline. The three types of diesel fuel are 1D, 2D, and a combination of the two. The lighter grade is 1D, and it offers less energy than 2D. It is more commonly used to reduce, if not eliminate, the gelling of fuel during cold winter climates; some people combine it with 2D.
The cetane rating denotes the diesel fuel’s ignition quality. The higher the rating, the easier the fuel burns evenly and the more power is produced. The average diesel fuel is at the 40-cetane level. Large diesel trucks and diesel pickup trucks prefer a cetane rating in the 45- to 50- level; this is considered as the premium diesel. However, this is not a general categorization—that is, the state’s regulations will dictate at which cetane rating is diesel fuel considered premium.
You should check with the fuel station with regard to the cetane ratings of the fuel they are selling. The higher the cetane rating, the better the drivability as well as reduced emissions. Moreover, the driver of the vehicle can feel the change in power (for the better).
Choosing the right diesel fuel additive can assure you that the diesel fuel will perform at its maximum because of its optimum quality. Here are some of the effects of a good quality diesel fuel additive:
- Reduces Cylinder Wear:
It neutralizes acids during combustion. It minimizes the wear of the acidic cylinder and it reduces the rate of engine oil depletion; thus, maintaining the quality of the engine oil for better protection.
- Minimizes Soot Loading:
It cleans fuel injectors and piston rings for better combustion and sealing. This reduces soot loading, controls soot-related wear, and increases engine oil viscosity.
- Stabilizes Fuel:
Fuel degradation increases deposits, which can promote the plugging of filter. The additive improves oxidation and thermal stability of the diesel fuel.
- Improves Fuel Economy:
It cleans dirty injectors as it improves the acceleration and restores horsepower, and in the long run it will enhance performance.
- Improves Water Tolerance:
An alcohol-free additive protects fuel systems against water contamination, helping to prevent emulsions. It also protects the metal against rust.
To combat the increasing diesel fuel prices, you can consider using a diesel fuel additive and experience the change in your expenses as well as the drivability of your vehicle.
Being a highly complex fuel, diesel fuel’s chemical structure changes from the time it leaves the refinery to the time it is pumped into holding tanks and fuel station to the time it gets pumped into the vehicle. Oxidization and structural changes occur in the fuel molecules. The energy per unit volume of the fuel can change during this phase, and this is what will cause your engine to have poor performance.
To combat the effects of fuel degradation and increase the fuel’s cetane value (discussed in detail below), the right type and ratio of fuel additives have to be used. Among a myriad of benefits, the engine will be able to obtain more power from a gallon of fuel.
Diesel fuel has more energy per gallon as compared to gasoline. The three types of diesel fuel are 1D, 2D, and a combination of the two. The lighter grade is 1D, and it offers less energy than 2D. It is more commonly used to reduce, if not eliminate, the gelling of fuel during cold winter climates; some people combine it with 2D.
The cetane rating denotes the diesel fuel’s ignition quality. The higher the rating, the easier the fuel burns evenly and the more power is produced. The average diesel fuel is at the 40-cetane level. Large diesel trucks and diesel pickup trucks prefer a cetane rating in the 45- to 50- level; this is considered as the premium diesel. However, this is not a general categorization—that is, the state’s regulations will dictate at which cetane rating is diesel fuel considered premium.
You should check with the fuel station with regard to the cetane ratings of the fuel they are selling. The higher the cetane rating, the better the drivability as well as reduced emissions. Moreover, the driver of the vehicle can feel the change in power (for the better).
Choosing the right diesel fuel additive can assure you that the diesel fuel will perform at its maximum because of its optimum quality. Here are some of the effects of a good quality diesel fuel additive:
- Reduces Cylinder Wear:
It neutralizes acids during combustion. It minimizes the wear of the acidic cylinder and it reduces the rate of engine oil depletion; thus, maintaining the quality of the engine oil for better protection.
- Minimizes Soot Loading:
It cleans fuel injectors and piston rings for better combustion and sealing. This reduces soot loading, controls soot-related wear, and increases engine oil viscosity.
- Stabilizes Fuel:
Fuel degradation increases deposits, which can promote the plugging of filter. The additive improves oxidation and thermal stability of the diesel fuel.
- Improves Fuel Economy:
It cleans dirty injectors as it improves the acceleration and restores horsepower, and in the long run it will enhance performance.
- Improves Water Tolerance:
An alcohol-free additive protects fuel systems against water contamination, helping to prevent emulsions. It also protects the metal against rust.
To combat the increasing diesel fuel prices, you can consider using a diesel fuel additive and experience the change in your expenses as well as the drivability of your vehicle.
Thursday, December 11, 2008
How the Industry Arrives at Diesel Fuel Prices
The movement in diesel fuel prices has had a strong impact in a variety of industries that makes use of diesel not only in running machinery, but also in transporting goods. This is because the use of diesel in transportation and energy underlie a huge number of functions in everyday life. Majority of delivery trucks, public transport vehicles like trains, buses, boats, ships and barges, and even construction and farming equipment, make use of engines that run on diesel fuel. This means that as the prices of diesel fuel soar, the costs required in facilitating the activities of which these vehicles and equipment take part in also increase. This either reduces the amount of profit these industries can have, or makes them have to choose the unfortunate option of levying costs on the retail prices they offer their consumers.
Regardless, anyone who has a stake in the way diesel prices change or move should at least attempt to understand what drives these fuel prices from going up or going down. By understanding what drives these movements and how the prices are determined, one is able to better foresee and interpret the various economic indicators that usually point to a time of increases in prices and the like.
In order to determine how fuel prices are derived, it’s important to first look at the costs associated with its production for availability in the retail market. The first cost to take into consideration is the cost of buying crude oil. Crude oil is the primary ingredient required in the production of a variety of fuels, including diesel fuel, gasoline, and even distillate heating oil. Crude oil prices are traded in the international market, which subjects it to the dynamics of international supply and demand. The limited supply of available crude oil from oil-producing countries, and the growing need or demand for energy worldwide has helped maintained competitive prices in the industry.
Next, crude oil enters the process of refining. This is the stage where crude oil is processed into the different forms of fuel it will become. Gasoline and diesel fuel primarily differ in the refining process that is used for it. Originally, better-refined gasoline was more expensive than diesel fuel; however, the costs of processing gasoline were overrun by the price impact of excess demand for diesel fuel. Diesel fuel and distillate heating oil, on the other hand, are processed using the same refining process. This is the reason why the increase in prices in one affects and increases the prices of the other.
Costs in order to bring the refined oil to the market—both marketing and distribution—also add material and at times, expensive costs to diesel fuel. This is because the transportation of oil, the marketing and advertising operations of the oil firms, and the manpower necessary to run all these operations, all involve costs that the company must incur in order to sell the final refined oil product to the market. Gasoline stations from where people get both gasoline and diesel fuel also incur costs for operations, a part of which is also levied on the retail prices of refined oil.
Over and above these production costs, governments levy taxes on oil products, creating greater impetus to increase fuel prices. It is the combination of these cost contributors that determine the dynamics of diesel fuel prices in the retail market.
Regardless, anyone who has a stake in the way diesel prices change or move should at least attempt to understand what drives these fuel prices from going up or going down. By understanding what drives these movements and how the prices are determined, one is able to better foresee and interpret the various economic indicators that usually point to a time of increases in prices and the like.
In order to determine how fuel prices are derived, it’s important to first look at the costs associated with its production for availability in the retail market. The first cost to take into consideration is the cost of buying crude oil. Crude oil is the primary ingredient required in the production of a variety of fuels, including diesel fuel, gasoline, and even distillate heating oil. Crude oil prices are traded in the international market, which subjects it to the dynamics of international supply and demand. The limited supply of available crude oil from oil-producing countries, and the growing need or demand for energy worldwide has helped maintained competitive prices in the industry.
Next, crude oil enters the process of refining. This is the stage where crude oil is processed into the different forms of fuel it will become. Gasoline and diesel fuel primarily differ in the refining process that is used for it. Originally, better-refined gasoline was more expensive than diesel fuel; however, the costs of processing gasoline were overrun by the price impact of excess demand for diesel fuel. Diesel fuel and distillate heating oil, on the other hand, are processed using the same refining process. This is the reason why the increase in prices in one affects and increases the prices of the other.
Costs in order to bring the refined oil to the market—both marketing and distribution—also add material and at times, expensive costs to diesel fuel. This is because the transportation of oil, the marketing and advertising operations of the oil firms, and the manpower necessary to run all these operations, all involve costs that the company must incur in order to sell the final refined oil product to the market. Gasoline stations from where people get both gasoline and diesel fuel also incur costs for operations, a part of which is also levied on the retail prices of refined oil.
Over and above these production costs, governments levy taxes on oil products, creating greater impetus to increase fuel prices. It is the combination of these cost contributors that determine the dynamics of diesel fuel prices in the retail market.
Wednesday, December 10, 2008
Diesel Fuel Prices versus Gasoline Prices
Why Diesel Fuel Is More Expensive Than Gasoline
History has it that the gasoline prices have been higher than the diesel fuel prices. But then again, this does not always hold true. During some winters, the demand for distillate heating oil increases which also raises the price of diesel fuel—so much so that is becomes more expensive than gasoline.
In the United States since September 2004, the price of diesel fuel has been by and large higher than the price of gasoline all year round and this is due to numerous reasons. The worldwide steady increase of demand for diesel fuel and other distillate fuel oils has put pressure on the tight global refining capacity—more so with the strong demand of such products in China, Europe, and the United States.
The transition from low sulfur diesel (LSD) fuel to ultra-low sulfur diesel (ULSD) fuel in the United States has affected the diesel fuel production and distribution costs. This is due to the new Environmental Protection Agency (EPA) standards for diesel fuel sulfur content.
Another reason for this shift in the norm between gasoline and diesel fuel prices is that the federal excise tax on the latter is higher than the tax on gasoline.
The Primary Factors Affecting The Price Of Diesel
Cost and supply of crude oil – The worldwide supply and demand of crude oil determines its price, and the rising demand has put great pressure on the supply. The Organization of Petroleum Exporting Countries (OPEC) has all of the spare production capacity and possesses a significant percentage of the world’s crude oil reserves. The prices spike as a response to the disorder in the international and domestic crude oil supply.
Tight refining capacity and international diesel fuel demand – Refineries in the United States have been in operations at around 90-percent capacity. Other countries depend more heavily on distillates and diesel fuel than does United States, thus making the refining capacity tight worldwide. Competing international demand for refined distillates affects the price of diesel fuel in the United States.
Product supply/demand imbalances – The prices of other commodities are more stable as compared to the prices of fuels because of the dependence on petroleum and because there are few alternative fuels in the market. The stocks decline fast if the supply declines unexpectedly. When stocks are low and declining, some players may bid higher for the product. Prices will stay high if the diesel fuel transportation system cannot support the flow of surplus supplies.
Seasonality in the demand for diesel fuel and distillates – The price of diesel fuel slowly rises during the fall, declines in the late winter, rises through the early spring, and then declines in the summer. The demand by farmers during the different seasons creates an upward pressure on the diesel prices.
Transportation costs – The distance between the retail location and distribution terminals and refineries has a direct relationship with the transportation cost—that is, an increase in one increases the other.
Regional operating costs and local competition – Depending on the location of the dealer, the cost of doing business varies which include wages and salaries, benefits, equipment, lease, insurance, overhead, and state and local fees. Even if retail stations are in close proximity to one another, they still have differing costs. Another factor that affects diesel fuel prices is the number and location of the local competitors.
History has it that the gasoline prices have been higher than the diesel fuel prices. But then again, this does not always hold true. During some winters, the demand for distillate heating oil increases which also raises the price of diesel fuel—so much so that is becomes more expensive than gasoline.
In the United States since September 2004, the price of diesel fuel has been by and large higher than the price of gasoline all year round and this is due to numerous reasons. The worldwide steady increase of demand for diesel fuel and other distillate fuel oils has put pressure on the tight global refining capacity—more so with the strong demand of such products in China, Europe, and the United States.
The transition from low sulfur diesel (LSD) fuel to ultra-low sulfur diesel (ULSD) fuel in the United States has affected the diesel fuel production and distribution costs. This is due to the new Environmental Protection Agency (EPA) standards for diesel fuel sulfur content.
Another reason for this shift in the norm between gasoline and diesel fuel prices is that the federal excise tax on the latter is higher than the tax on gasoline.
The Primary Factors Affecting The Price Of Diesel
Cost and supply of crude oil – The worldwide supply and demand of crude oil determines its price, and the rising demand has put great pressure on the supply. The Organization of Petroleum Exporting Countries (OPEC) has all of the spare production capacity and possesses a significant percentage of the world’s crude oil reserves. The prices spike as a response to the disorder in the international and domestic crude oil supply.
Tight refining capacity and international diesel fuel demand – Refineries in the United States have been in operations at around 90-percent capacity. Other countries depend more heavily on distillates and diesel fuel than does United States, thus making the refining capacity tight worldwide. Competing international demand for refined distillates affects the price of diesel fuel in the United States.
Product supply/demand imbalances – The prices of other commodities are more stable as compared to the prices of fuels because of the dependence on petroleum and because there are few alternative fuels in the market. The stocks decline fast if the supply declines unexpectedly. When stocks are low and declining, some players may bid higher for the product. Prices will stay high if the diesel fuel transportation system cannot support the flow of surplus supplies.
Seasonality in the demand for diesel fuel and distillates – The price of diesel fuel slowly rises during the fall, declines in the late winter, rises through the early spring, and then declines in the summer. The demand by farmers during the different seasons creates an upward pressure on the diesel prices.
Transportation costs – The distance between the retail location and distribution terminals and refineries has a direct relationship with the transportation cost—that is, an increase in one increases the other.
Regional operating costs and local competition – Depending on the location of the dealer, the cost of doing business varies which include wages and salaries, benefits, equipment, lease, insurance, overhead, and state and local fees. Even if retail stations are in close proximity to one another, they still have differing costs. Another factor that affects diesel fuel prices is the number and location of the local competitors.
Tuesday, December 9, 2008
What Constitutes Diesel Fuel Prices?
Tracing its name from its German inventor, Rudolf Diesel, diesel fuel is what is used in the compression ignition engines of motor vehicles. It is important to a country’s economy, quality of life, and national security. Any fluctuation of its price will have an effect on how people live because of its direct and indirect relationship with the other consumer products. There are different factors that determine diesel fuel prices but first we have to have an understanding of how it is produced and used.
Diesel Fuel Quality and the Environment
From crude oil, there are a lot of products that can be produced. These are gasoline, diesel, other distillates (heating oil), heavy fuel oil (residual), jet fuel, liquefied petroleum gases (LPG), and other products. There are different grades or types of petroleum diesel. The Number 2 type is the main source for motor diesel fuel utilized in the United States. It is the same type used for heating buildings and in the industry.
It has relatively low sulfur content, which is an important characteristic tested for diesel fuels. In 2006, the new Environmental Protection Agency (EPA) standards for diesel fuel sulfur content were implemented. Ultra-Low Sulfur Diesel (ULSD) fuel which has a sulfur content of less than 15 parts per million (ppm) had to be sold in the United States, which in turn replaced most of the Low Sulfur Diesel (LSD) fuel.
Diesel engines can be found in nearly all semi-trucks, delivery vehicles, buses, trains, ships, boats and barges, as well as farm, construction and military vehicles and vehicles. Because of this widespread use, people have always been thinking of ways to manufacture products that are safe for the environment. Biodiesel falls under this category and is produced from vegetable oils, animal fats, or recycled restaurant grease. Its name denotes that it is biodegradable and can lessen vehicle emissions of carbon monoxide, hydrocarbons, and particulates.
Diesel Fuel Production and Delivery
In the United States, most diesel fuel that is consumed is produced in their local refineries. Additionally, a small percentage of fuel is mainly imported from Canada and the Virgin Islands. From both local and imported crude oil, diesel fuel is manufactured by the local refineries and it is transported by pipeline from these refineries and ports to the terminals in close proximity to the main consuming areas. Then it is put in tanker trucks for delivery to retail service stations.
Diesel Fuel Cost Components
Inclusive in the cost to manufacture and transport diesel fuel to the consumers are the costs of crude oil, refinery processing, marketing and distribution, and retail station operation. The costs and profits of the refiners, marketers, distributors, and retail station owners are reflected in the retail pump price. The comparative share of these cost components to the retail price varies over time and among the country’s regions.
The price at the pump also is inclusive of federal, state, and local taxes. In other states, counties, and city governments levy additional taxes. Local market conditions and other factors such as the location and the marketing strategy of the owner are reflected in the retail price as well.
The components of diesel fuel prices can be broken down into the following (from highest to lowest percentage): crude oil, refining, taxes, and distribution and marketing. Knowing this information will give the consumers a clearer picture why the prices are pegged at such and why they fluctuate.
For me, Biodiesel Fuel is the best constitutes for high priced of diesel fuel.
Diesel Fuel Quality and the Environment
From crude oil, there are a lot of products that can be produced. These are gasoline, diesel, other distillates (heating oil), heavy fuel oil (residual), jet fuel, liquefied petroleum gases (LPG), and other products. There are different grades or types of petroleum diesel. The Number 2 type is the main source for motor diesel fuel utilized in the United States. It is the same type used for heating buildings and in the industry.
It has relatively low sulfur content, which is an important characteristic tested for diesel fuels. In 2006, the new Environmental Protection Agency (EPA) standards for diesel fuel sulfur content were implemented. Ultra-Low Sulfur Diesel (ULSD) fuel which has a sulfur content of less than 15 parts per million (ppm) had to be sold in the United States, which in turn replaced most of the Low Sulfur Diesel (LSD) fuel.
Diesel engines can be found in nearly all semi-trucks, delivery vehicles, buses, trains, ships, boats and barges, as well as farm, construction and military vehicles and vehicles. Because of this widespread use, people have always been thinking of ways to manufacture products that are safe for the environment. Biodiesel falls under this category and is produced from vegetable oils, animal fats, or recycled restaurant grease. Its name denotes that it is biodegradable and can lessen vehicle emissions of carbon monoxide, hydrocarbons, and particulates.
Diesel Fuel Production and Delivery
In the United States, most diesel fuel that is consumed is produced in their local refineries. Additionally, a small percentage of fuel is mainly imported from Canada and the Virgin Islands. From both local and imported crude oil, diesel fuel is manufactured by the local refineries and it is transported by pipeline from these refineries and ports to the terminals in close proximity to the main consuming areas. Then it is put in tanker trucks for delivery to retail service stations.
Diesel Fuel Cost Components
Inclusive in the cost to manufacture and transport diesel fuel to the consumers are the costs of crude oil, refinery processing, marketing and distribution, and retail station operation. The costs and profits of the refiners, marketers, distributors, and retail station owners are reflected in the retail pump price. The comparative share of these cost components to the retail price varies over time and among the country’s regions.
The price at the pump also is inclusive of federal, state, and local taxes. In other states, counties, and city governments levy additional taxes. Local market conditions and other factors such as the location and the marketing strategy of the owner are reflected in the retail price as well.
The components of diesel fuel prices can be broken down into the following (from highest to lowest percentage): crude oil, refining, taxes, and distribution and marketing. Knowing this information will give the consumers a clearer picture why the prices are pegged at such and why they fluctuate.
For me, Biodiesel Fuel is the best constitutes for high priced of diesel fuel.
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