Diesel Falling Below Gas as Valero, Total Expand Supply, Boosting VW Jetta

[Purveyor]

Feb. 23 (Bloomberg) -- Diesel, which has traded consistently above gasoline in the U.S. since July 2007, will sell at a discount by April as a global recession saps demand for the world’s most-consumed transport fuel and inventories rise.

“By April, gasoline is going to cost more,” said Andrew Reed, an Energy Security Analysis Inc. oil expert in Boston. “Once we get past heating oil season, it’s all up to diesel demand” to set distillate prices, he said. “The real weakness is going to be exposed.”

The New York Harbor market price for diesel dropped 13 percent in 2009 to within 14 cents per gallon of gasoline, which rose 11 percent, according to data compiled by Bloomberg. Reed sees diesel costing as much as 20 cents less from April until demand for heating oil, its distillate twin, increases in the fall.

As reduced consumer spending trimmed the volume of goods transported, the American Trucking Associations’ truck tonnage index fell 14 percent in December from a year before, the biggest drop since 1996. U.S. consumption of diesel and heating oil declined seven times faster than gasoline in January, the Energy Department says. Stockpiles rose to 106.6 million barrels last month, the most since at least 1993.

The recession will cut world oil demand this year by a million barrels a day to 84.7 million, the biggest drop since 1982, according to the Paris-based International Energy Agency. Oil in New York dropped 73 percent from a record $147.27 a barrel in July to $40.10 at 9:41 a.m. today. Crude accounts for 39 percent of diesel’s retail price, the Energy Department says.

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BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601109&sid=aNL3yG.l6ly4&refer=home

[Andy823]

1. That's the way it used to be.

Diesel used to always be cheaper than gas, a lot cheaper, but the last 8 years it has caught up and went passed the price of gas! I think it had a lot to do with use of diesel around the world increasing, but I also think it had a lot to do with greed by big oil. Last year I paid $4.99 a gallon for diesel, and $4.49 for gas. Thats 50 cents more for diesel. When gas prices started going down diesel did not follow as fast, and at one point I was paying about 80 cents more for diesel than gas. Now there is only a 44 cent difference in price and while gas has gone up in the last 2 weeks, diesel has stayed the same. I sold an older truck I had with a gas engine that got around 12 miles per gallon, and bought a used diesel truck that gets around 19, and has more power! I almost didn't buy it because of the high cost of diesel, and reports I had heard that prices would go even higher, but I got a great deal on it "because" prices were so high on diesel fuel.

[Captain Hilts]

2. It's also refined to burn much cleaner now. nt