Slitherine

quote:

ORIGINAL: Raverdave

Currently we are paying Aussie $1.56 per liter.

(US$4.04 per gallon)

(EuR$ 0.79 per liter)

( GBP$ 0.62 per liter)

quote:

ORIGINAL: Prince of Eckmühl

quote:

ORIGINAL: 06 Maestro

POE

I recognize the basic truths to your points, however, the situation still is odd. For many decades (except WW2) the U.S. oil companies maintained surplus production capacity. That was during times of huge increases of domestic use. To my knowledge, diesel was always cheaper. I am certainly not an expert, but it seems likely that you can get much more diesel from a barrel of oil than you can gasoline from a barrel of oil.

I know that diesel demand has increased, but it seemed predictable that this would occur. It appears that the oil companies have intentionally let production (comparatively to gas) lag so as to maximize profits on an item that is cheaper for them to produce. either that, or the current bosses are just not as savvy as the oil bosses of years gone by.

It also seems to me that diesel is a much more efficient fuel. If I am correct, then it should have priority on production expansion-not the other way around.

There are these industrial facilities called oil refineries, many of which have the ability to produce diesel fuel, but not necessarily at the same volume as they produce other fuels, like gasoline or heating-oil. The parts of the refinery that produce gasoline, for instance, are not the same parts that produce diesel. The only way that a refiner is gonna be able to produce more end-product is to expand it's diesel-refining capacity. They can't just flip a switch and produce diesel from the same equimpment with which they produce gasoline.

You are right to be circumspect about the situation, because refiners could indeed convert more of the plant's hardware to diesel production. They don't do so, because they make more money off of diesel than gasoline. Again, the fact that the US has been exporting diesel, most notably to China, and normally limits all imports of distillates exacerbates the problem.

PoE (aka ivanmoe)

quote:

ORIGINAL: Jeffrey H.

quote:

ORIGINAL: Prince of Eckmühl

quote:

ORIGINAL: 06 Maestro

POE

I recognize the basic truths to your points, however, the situation still is odd. For many decades (except WW2) the U.S. oil companies maintained surplus production capacity. That was during times of huge increases of domestic use. To my knowledge, diesel was always cheaper. I am certainly not an expert, but it seems likely that you can get much more diesel from a barrel of oil than you can gasoline from a barrel of oil.

I know that diesel demand has increased, but it seemed predictable that this would occur. It appears that the oil companies have intentionally let production (comparatively to gas) lag so as to maximize profits on an item that is cheaper for them to produce. either that, or the current bosses are just not as savvy as the oil bosses of years gone by.

It also seems to me that diesel is a much more efficient fuel. If I am correct, then it should have priority on production expansion-not the other way around.

There are these industrial facilities called oil refineries, many of which have the ability to produce diesel fuel, but not necessarily at the same volume as they produce other fuels, like gasoline or heating-oil. The parts of the refinery that produce gasoline, for instance, are not the same parts that produce diesel. The only way that a refiner is gonna be able to produce more end-product is to expand it's diesel-refining capacity. They can't just flip a switch and produce diesel from the same equimpment with which they produce gasoline.

You are right to be circumspect about the situation, because refiners could indeed convert more of the plant's hardware to diesel production. They don't do so, because they make more money off of diesel than gasoline. Again, the fact that the US has been exporting diesel, most notably to China, and normally limits all imports of distillates exacerbates the problem.

PoE (aka ivanmoe)

Now we're getting somewhere. The first thing that enters my mind is supply and demand. But it is also true that diesel is heavier than gasoline and hence takes less refining. I think the yield per barrel of crude would be higher for refining diesel vs. any type of lighter distillate, but that is too simplistic of a viewpoint.

Limited capacity, no imports and high export prices just about sums it up.

quote:

ORIGINAL: junk2drive

My understanding was that gasoline became the automotive choice because it was a leftover from the refining process and therefore cheap. Way back when anyway.