why is diesel so expensive when its a by product of unleaded

The official explanation is that our price is set by the Singapore refinery prices????

Because there is a shortage of diesel over there we pay???

Now I doubt whether even the Lord would know why we have to suffer for their diesel shortage??

Anyhow I doubt anything is going to change it much, just back off on the speed a bit and travel less I guess.

You would be surprise to find that petrol is “by-product”. Diesel and jet fuel (sort of kerosene) accounts for vast majority of refinery products.

Serg

GOVERNMENT!!!!!

Have a look at your next racv article and see the tax's placed on each litre of diesel!!!

It's because of refinery margins. Currently the refinery margin on ULP is about 5c/lt, while on diesel its about 30c/lt.
Why? Because they can. Officially its because there's less competition in the diesel market.
Excise is about the same on both so nothing to do with the RuddBot.

Mobil's Queensland diesel cracker has just broken down, so there will be a shortage in the market everywhere.
I think this may be the answer , as I noticed the difference between ULP and diesel has risen to 30 CENTS in Kincumber Shell ( Diesel 167.5 and ULP 137.9 before the discount day of Tuesday) on the NSW Central Coast.
Regards Philip A

Raise a complaint with the ACCC.

Go to

This Link

Why do you think it's a byproduct of unleaded? I thought it was the other way around.

The .38 cents per litre credit for some business activities is the reason. They decided some years ago to just start whacking it on top! It's the same with any rebate/grant/credit etc that the Govt gives business-business just whacks it straight on top. Why it took the oil companies so long to do it with diesel is a mystery.
From this July business can claim 38 cents per litre for petrol for the same activities as has been the case for diesel and also from July this year 19.0715 cents per litre for just about any activity for diesel and petrol-from 2012 that credit will jump to 38 cents per litre.
Fuel is going to get progressively even more expensive in Australia that's for sure!

Happy (?) days

George

Its the other way around, crude oil is refined to seperate diesel from oil, which is refined to seperate kero and more oil, terps and more oil, ulp and more oil, metho and more oil....yada yada...something like that anyway.
The Government has put gst on excises on taxes on levies so on, so out of $1.60, $1.10 is tax on tax on tax on tax.
Andrew

Some of the facts……as distinct from the myths.

Diesel is a mid-distillate similar to heating oils, kerosene and jet A1 fuel. It is not a by-product of any other refining process such as petrol. As such the production of diesel is in competition with these other products. Demand for the various products is cyclical. For example, the Northern Hemisphere has been in winter and demand for heating oils and consequently production has been higher. There are only so many products a refinery can produce and it will be directed according to demand. Supply can also be affected by maintenance shutdowns at refineries, which due to the capital cost of building, are in short supply globally.

The cry that often goes out as to why pricing in Australia is linked to the price of the product in Singapore and what has demand in other countries got to do with the price in Australia. The answer is simple; fuel, in any form, is a commoditised product and therefore supply and demand issues, no matter where they occur will affect the price of the fuel. We live on an island for sure, but we are part of a global economy.

Other considerations include the fact that the use of diesel powered vehicles is higher in other countries than it is in Australia, and this, combined with surging demand from industry, both in Australia and abroad is putting pressure on the supply of diesel from the refineries.

Many question why it is the case in Australia that diesel is more expensive than petrol. Well it isn’t! In the US, for example, the price of diesel is more expensive than petrol. The UK is similar, that is on average diesel costs more than petrol.

On April 7 the average price of petrol across America was US$ 3.35 per gallon, whilst the price of diesel was US$ 4.01 per gallon. Expressed as a percentage the average price of diesel was 16% higher than petrol.

The Exploroz fuel watch on 10 April (acknowledging 3 days later) had the average cost of diesel in Australia at 9% higher than petrol. So the spread between diesel and petrol in America was 16%; Australia was only 9% higher, debunking the myth that we pay a greater spread between the petroleum products.

Importantly, another factor affecting the price of diesel is the new emission standards that have been introduced across a wide number of industrialised countries. These standards require lower sulphur content in diesel fuel and this has changed the refining process for diesel and increased the cost of its production significantly.

I’m all for informed debate on the subject and I can understand the frustration at increasing fuel prices especially as it hits the hip pocket, however there is plenty of misinformation that tends to lead to a greater misunderstanding of some of the issues.

I wrote a ‘blog’ on fuel pricing the other day, but it relates more about pricing discount cycles for petrol.
Fuel Blog

I am more interested why in suburban Melbourne, Shell charge more for diesel than other brands. Yes, I know there are a couple with similar pricing (Shell near Westgate bridge for example), but on the whole they appear to be around 5c/lt more expensive than others. I can only assume they dont want us diesel users to take space in their stations where they have more ulp sales.

I used to have a Coles Myer source card and could get 8c off per litre. Even with the 8c off, I found a BP card better value with 5% off.

What do other people do for the best value for diesel?

Because they can.

All the best
Eric

When I bought my diesel car, diesel was about 2 cents/litre dearer than petrol, it is now 20 to 25 cents dearer. Years earlier it was always cheaper. The excuse is always that it is in less demand so is therefore dearer, now demand is increasing through the increased popularity of the fuel, it is getting even dearer. I smell rip off no matter what the economists says. There is also no discount cycle for diesel, as there is for city petrol buyers, in the country areas there is no discount cycle for anyone.

GB

I thought diesel was based on sinapore crude pricing and last fridy diesel in singapore was equivalent of aud .5 or 50 cents!

Ask that stupid bloody Ex Democrat leader Megg Lees, that was one of her damn silly enviromental issues she put forward in Parliment to help reduce emissions.....damn fool of a woman .

.

Not sure why people may think diesel is a by product of unleaded?? None of it is, so to speak is a by product of anything other than the refining process.

I will try to keep my explanation of a very complex process as simple as I can.

A barrel of crude is cracked or broken down in the refining process to a whole range of products, unleaded, diesel, jet fuel etc etc.

The base product produced by refining is the heavy fuel oils (HFO)and greases, HFO is mostly used in the shipping industry and is called bunker fuel, it then ranges up wards to the lightest stuff, kerosenes of various sorts.
Petrol and diesel are somewhere in the middle of the process.

Older refining process would produce more heavy product and less of the lighter stuff which had a bigger market demand and was a more valued product.
The more heavy stuff produced the less money or yield produced per barrel. This meant the price for the more valued product such as petrol and diesel had to increase to cover the loss.
For quite sometime refineries were selling bunker fuel at a large loss just to get rid of it as they had to store this product and that caused issues on its own right.
(This is why shipping companies almost always prefer to bunker their ships in Singapore as there are so many refineries producing HFO they sell it cheaper than virtually anywhere else in this part of the world)
To try and reduce the heavy oils and improve the yield per barrel of the more valued product most older refineries were shut down and those deemed viable had upgrades to improve the cracking process and reduce the amount of loss making product and increase the yield of the more valued products.
Mobil Altona Refinery in Melbourne was one such refinery upgraded with a new cracker to improve yields, the cost of the upgrade was around $800 million dollars about 10 years ago.
Some refineries undertook cracking upgrades and used a different type of cracker and found that the process did not produce the yield per barrel of valued product as originally planned, this quite often occurred when they discovered the crude being cracked did not do so well in the cracking process. Bass Straight crude is a light crude and does not produce the yields across the range as required.

This meant that to obtain better yields from a particular refinery they needed to use imported crude which obviously caused cost increases due to additional shipping and storage costs.
Sometimes they will even blend crudes from different areas to improve the yield as required.
I believe that Shell Geelong was one such refinery that had issues with its new cracker and so is not as profitable a refinery as others in the market.

Sometimes they will import a "tanker' load of crude from a particular part of the world because that crude will crack to give them even better yield of say diesel per barrel or heating oil etc.
This may be one answer for why one "Brand" or even type of fuel is dearer than another.

I hope this helps.

Cheers

The laws of Supply and Demand work for diesel as a finished product, just as they do for crude oil. Let's hope GTL diesel (gas to liquid) takes off really soon and that it is cheaper as a finished product than current diesel.

Supply / Demand

Never the twain shall meet thanks to Dubya!