Quote Originally Posted by MRJB1929 View Post
Supply and demand and current market price are things that are in play here.

I found it interesting that a few years ago, it cost MORE to purchase Leaded gas than unleaded gas at the pumps. Since Lead is an additive, going without it should cost less, right? Wrong. All production was geared to making unleaded gas. Creating leaded gas was the abnormal process thus it cost more to create.

Now... I don't really buy the story about Diesel fuel. The same process has been used for years and the vehicle to gas fuel versus the vehicle to diesel fuel remains approximately the same. It didn't make sense that diesel fuel went above gas prices and now have moved near or slightly below gas prices. The oil companies control the prices by how much they produce and have in researves... thus supply and demand. They know this econmic principle very well.
J

Good observations on supply and demand plus the impact of production costs. You've got the diesel thing a little off though, but given what you display of economic knowledge maybe this will help.

A few years ago federal standards for sulphur in diesel fuel wer severely tightened, which meant that diesel fuel would need more processing than previously, thus raising costs. Also, with the economy of the time, many jurisdictions felt it a good time to tack on extra taxes that didn't hit the consumer as directly (diesel fuel is a small fraction of total fuel market at retail). Both those factors pushed diesel fuel prices above gasoline. Now, with economic slow down, diesel demand is down. This time of year there is also less demand for heating oil (alternate branding of diesel fuel). The amount of diesel yield versus gasoline in any given crude run at the refinery is not a constant, it varies with the type of crude in the supply stream. Using supply and demand principal, it would be realistic to say that diesel inventories are comparatively high right now so it's "on sale". The diesel fuel/heating oil market is less elastic than gasoline, so needs different incentives.