Why is diesel more expensive than gas – Gas prices explained

Why is diesel more expensive than gas? Now, there’s a gas-related question that sticks out from the crowd. Quite possibly, it’s the most frequently asked one. Also, it seems as though it’s not ready to lose its popularity yet. Quite the contrary! Many folks type this question into their search bars on a daily basis!

Okay, so what’s the deal? Why is diesel more expensive than gas? Is there a rational explanation of why that’s so? Of course, there is! Otherwise, we probably wouldn’t be writing about it here, on GasAnwer. Anyway, if you’re eager to find out the answer – you’re at the right address.

In the US, diesel’s more expensive than gasoline due to various federal and state taxes. In the EU, the demand boosts the prices since most cars use diesel fuel. Contemporary diesel fuel (ULSD) is also costlier to make. Heating fuel is made out of the same ingredients as diesel. During wintertime, that similarity can boost the price of both. 

Now, of course, this can’t be the only info about the great subject, right? Right. That’s why you shouldn’t hesitate to read the whole thing!

Table of Contents

Diesel vs. gasoline 101

Before we provide you with the answer to the main question, it’s best we expand the topic a bit. In order to understand the various tiny details we’ll cover, one must know some basic info. That’s why we’ve chosen to talk a little about the differences between the two types of fuel. So, shall we begin?

Aren’t diesel and gasoline the same?

Here’s the simplest answer: nope, they aren’t. Of course, they’re both:

  • made from crude oil refinement process. 
  • used as fuel inside internal combustion engines. 

That doesn’t mean they’re the same. Their main difference concerns the refining methods. Essentially, diesel is easier to refine than its sibling. However, there’s a catch: diesel has more pollutants. Therefore, they need to be extracted so both types of fuel have identical levels of emissions. Oh, it seems as if this provoked some further questioning!

Is diesel worse for the environment than petrol?

At first sight, it seems that diesel fuel’s more environmentally friendly. Here’s the thing: diesel cars get 25 to 35% better mileage. Additionally, they emit less CO2 into the atmosphere than gasoline-powered cars. That sounds lovely, right? Right. However, here’s a fact that’s not so pleasant:

  • diesel vehicles emit 25 to 400 (!) times greater mass of particulate black carbon per m/km. How about that?

It’s safe to say both options can’t be considered environmentally friendly. Still, most experts would agree on one thing. The latest diesel models have reached a lower level of emissions. Such as regular gasoline cars, that is.

Is a diesel engine more efficient than gasoline?

Many studies have shown that a diesel engine is about 20% more thermally efficient. This means that diesel cars have a 20% increase in fuel economy. The thicker density of diesel enables it to generate more energy using a less amount of fuel.

Do diesels run better in hot weather?

That’s right, diesel-powered vehicles actually run better when they’re surrounded by hot weather. One can’t quite say they’re the ideal type of vehicle in cold weather. Still, neither are gas-powered cars.

Here’s what the experts say:

  • diesel engines tend to be better, more reliable, and more durable than gas engines. Regardless of the weather conditions, that is. 

Are diesels more expensive to maintain?

Many car owners will agree with this: maintaining a diesel’s cheaper overall. Why’s that so? Well, diesel engines just seem to be having fewer problems than gas engines. However, you’ll probably pay more for a diesel engine repair. Here’s a little digression. If you’re wondering does diesel fuel stain clothes, follow that link.

Okay, so we’ve answered some basic questions surrounding today’s subject. It’s time we dive deeper into the question of why is diesel more expensive than gas?

A gas station with an orange & white roof.

Why is diesel more expensive than gas?

Currently, we’re witness to record fuel prices all around the world. For example, just take a look at the way things stand in the US. Fuel prices are hitting record highs for the second time in the last half a year. At least that’s what we saw in the latest report from the AAA (American Automobile Association).

So, what does the report say? Nothin’. Except for the “little” fact that the average price of a gallon of gas is about $4.374. On the other hand, you’d have to cough up $5.550 for the same amount of diesel. Here’s another “cool” fact: the cost of diesel has risen by about 78% in the past 12 months.

One might wonder: well, if both fuel types are produced from crude oil, then… There’s no reason to finish that one, we already know the story. The thing is: it’s just not the production costs that we’ll have to consider. There are various factors that influence the price of fuel. For instance, what about taxation? It’s safe to say you’ll find your answer right there.

The last factor we’ve mentioned might be it (at least when we’re talking about the US). That’s because there are high federal and state taxes on diesel. And that’s because it emits good amounts of carbon. Let’s see those numbers! You’ll want to know that:

  • the federal tax on diesel is 24.4 cents per gallon. 
  • the federal tax on gasoline is 18.4 cents per gallon. 

One is unable to unsee the disparity. Oh, and let’s talk about state taxes. Certain states will add as much as 74.1 cents of tax per gallon of diesel. Okay, so that’s that about taxation. Is there anything else we should mention? Something that might be useful to folks outside the US?

Non-taxation factors

Now, let’s consider the question of gasoline vs. diesel usage. Needless to say, they’re both used quite differently. For instance, the demand for diesel is most of the time very different than that of gas. Unlike gasoline, diesel is greatly used in the industry. Machinery, generators, and large delivery motors depend greatly on it. Therefore, we can conclude the following:

  • the higher the demand, the higher the cost. 

As you can assume, the price of gasoline isn’t targeted in the same manner. That’s, among other things, why diesel is more expensive than gasoline. However, that’s not the end of this story.

Mind the season

Did you know that fuel oil that heats homes is produced from the same ingredients as diesel? Now that you do, you might understand why the prices of diesel seasonally change. For instance, that’s exactly why prices of diesel seem to jump during wintertime. It’s like we said: the prices follow the demand.

Oh, and speaking of winter. If your diesel “chooses” to gel, here’s what you can do.

What about Europe?

Yup, we’ve talked about the US quite a lot. What’s the situation in the EU? Diesel’s costlier there, also. Additionally, only about 2% of cars in the US are powered by diesel. Needless to say, the situation’s quite different in the EU.

A good amount (the majority) of EU cars depend on diesel fuel. One can rightly assume that the demand is always high. And it’s not just the EU we should be talking about there. What about rapidly-growing countries like India and China? They’ve also put a greater demand on diesel supplies.

Was it always like this?

As always, here’s the simplest answer first: nope, it wasn’t. Until two decades ago, the price of a gallon of diesel was cheaper than gasoline. Initially, diesel was “designed” as a more economically-friendly alternative to gasoline. That’s because it gives vehicle owners a better miles-per-gallon option. For a certain period of time, it was the favorite of many motorists around the world.

Once 2004 hit, we’ve seen the end of the diesel’s-cheaper-than-gasoline story. Since then, gasoline’s been considered a cost-friendlier option of the two. That’s according to the info provided by the US Energy Information Administration. Anyway, we can notice that the price has gone up at a specific moment. It happened once environmental questions came into the spotlight.

The ULSD (ultra-low-sulfur diesel) revolution

Does that acronym sound familiar? If that’s so, you might already know this. Anyway, ULSD (ultra-low-sulfur diesel) fuel rose to prominence between 2006 and 2010. It was bent on replacing the fuel known as Low Sulfur Diesel. Now, of course, this had a huge (positive) environmental impact. However, it greatly boosted the price of gas at the same time.

Why is ULSD so expensive? Well, in order to make ULSD, the refining industry had to invest some good money into the process. Let’s be a bit more precise. They had to invest about $8 billion into the infrastructure. Additionally, the daily refining costs of ULSD are higher than those of Low Sulfur Diesel. One can assume why we don’t want to make an acronym out of the latter.

What’s left is to say goodbye. However, here are some tips on how to save money on diesel fuel.

The bottom line

Alrighty, folks! That’s about all there is to the why-is-diesel-more-expensive-than-gas issue! Now you’re aware of all the factors that make diesel more expensive than gasoline! If you’re curious about reading up on many different gas-related topics, visit our blog.