How much diesel fuel is produced relative to other petroleum products?
U.S. Refiner and Blender Net Production of Refined Petroleum Products in 2006 (Total = 6.56 Billion Barrels)


What is happening with diesel fuel prices?
For many years, diesel fuel prices tended to be lower than gasoline. Since September 2004, this trend has disappeared, with diesel fuel prices tracking or exceeding gasoline. In May 1998 the national average Diesel Fuel price was $1.069; and Gasoline was $1.038; in May 2008 gasoline was $3.72 and Diesel $4.33.
This price differential is due to a variety of factors – global and domestic, economic and political. Both gasoline and diesel fuel prices will increase as the price of crude oil rises, however other influences have worked to accelerate diesel’s price relative to gasoline. To understand the cause of this increase and its implications for the future, this paper provides a brief summary of the production process and the elements contributing to the current price spread between gasoline and diesel fuel.
Fuel production
Each barrel of oil is 42 gallons, approximately 19% of which is generally dedicated to the production of diesel fuel. This compares to approximately 47% for gasoline and 10% for kerosene-type jet fuel. The remaining 24% is split among a variety of oils & gases. While refiners have some ability to alter these percentages, they are unlikely to swing more than 7-8% in any direction. As a result, each barrel of crude oil will always produce more gasoline than diesel fuel.
Fuel Taxes
Motor fuel taxes are collected at the federal, state and sometimes the local level. The federal motor fuels tax goes toward the highway trust fund; a fund established to repair and maintain the nation’s highway infrastructure. State taxes are used for a variety of purposes.
Since October 1, 1997, the federal government has imposed a 24.4 cents per gallon tax on diesel fuel compared to a 18.4 cents per gallon tax on gasoline. Every state also levies a diesel tax the average of which is 22 cents per gallon (ranging from 8 cents in Alaska to 32.9 cents in Wisconsin). Some states levy the same tax rate on both gasoline and diesel fuel, however 15 taxes currently tax diesel more than gasoline with only 6 states imposing higher gasoline taxes. More information on state fuel taxes can be found here.
Why have diesel prices risen so significantly in the last few years?
Fuel Demand - Weakness in the U.S. economy has led to a softening in gasoline demand. While gasoline prices have increased this winter due to surging crude oil prices, they have not risen as high as they would have if year-on-year gasoline demand growth was unfolding at normal rates.
On the other hand, demand for distillates – such as diesel and jet fuel--- in Europe, Asia, and the Middle East has continued to grow at a fast pace. In Europe, financial incentives continue to promote the transition from gasoline-powered to diesel-powered cars and light trucks, while a growing economy has lifted transportation sector consumption overall.
Traditionally, seasonal changes in demand have also affected diesel fuel prices, however this year (2008) has seen an unusual pattern. According to the Energy Information Administration (EIA), gasoline usually sells at a premium to diesel fuel in the spring and summer, the peak driving season. In the autumn, demand for distillate fuels (heating oil and diesel) picks up due to farm use and trucking of goods ahead of the holidays at the same time that gasoline demand begins to soften. However this year instead of the traditional converging of prices in the spring, diesel fuel prices have continued to rise at a quicker pace than gasoline, leading to a 60-70 cent per gallon premium.
Inventories and supply balances
As Europe’s demand for diesel has grown through the dieselization of the passenger fleet and overall economic growth, Europe’s capacity to supply capacity has been strained due to refinery maintenance, tighter emissions standards, and unplanned outages. At the same time, a supply shortage also developed in the U.S due in part to U.S. exports of distillate fuel to Latin America and Europe to meet their high demand, leaving diesel fuel inventories at the bottom of a five year average.