Which costs more to make, diesel or gasoine?
March 24, 2008 6:51 AM Subscribe
What is the difference in cost to produce diesel fuel versus gasoline? Does one require more oil than the other?
I'm involved in a discussion on another forum where the issue of the oil required to produce fuel has come up in relation to comparing the gas mileage of diesel cars to hybrids. I've cited this page claiming that the Union of Concerned Scientists thinks mileage values for diesel engines should be adjusted down 20% to account for differences in oil required to produce the fuels. Another poster has cited this post on a third forum as saying that no comparison can be made.
Does anyone have any harder info on the oil costs of the two fuels?
I'm also interested in the long term price of the two fuels. Diesel has been more expensive on average for the last few years, but was less expensive before that. Does anyone have any info on long term price estimates for these two fuels, especially if diesel was more widely adopted as a car fuel in the US?
I'm involved in a discussion on another forum where the issue of the oil required to produce fuel has come up in relation to comparing the gas mileage of diesel cars to hybrids. I've cited this page claiming that the Union of Concerned Scientists thinks mileage values for diesel engines should be adjusted down 20% to account for differences in oil required to produce the fuels. Another poster has cited this post on a third forum as saying that no comparison can be made.
Does anyone have any harder info on the oil costs of the two fuels?
I'm also interested in the long term price of the two fuels. Diesel has been more expensive on average for the last few years, but was less expensive before that. Does anyone have any info on long term price estimates for these two fuels, especially if diesel was more widely adopted as a car fuel in the US?
I thought you took a barrel of crude and from that barrel you distilled the different flavors of fuel... kerosene, diesel, gas of all different grades. As far as I know diesel is by by product of the distilation of the oil... at least off road diesel- it is cheaper to produce. (Second one down on list)
There are not as many refineries in the US anymore; Hurricane Katrina wiped them out. This caused our diesel prices to jump. Then came along the new diesel, which contains less sulfur. This brought additional cost- how much I don't know. I have to imagine that if more of us used diesel the price would continue to escalate.
posted by bkeene12 at 7:43 AM on March 24, 2008
There are not as many refineries in the US anymore; Hurricane Katrina wiped them out. This caused our diesel prices to jump. Then came along the new diesel, which contains less sulfur. This brought additional cost- how much I don't know. I have to imagine that if more of us used diesel the price would continue to escalate.
posted by bkeene12 at 7:43 AM on March 24, 2008
Wouldn't they be able to create more of one type from a barrel of oil if they chose to do so? Or is "cracking" only always going to give you the same percentages of gas, diesel, kerosine, vaseline etc.?
derail- OK, so since Diesel and #2 fuel oil are essentially the same Home heating oil has jumped upwards to $3.89 per gallon. How many MPG will my house get, and why is noone talking about the cost of heating one's home?
posted by Gungho at 8:11 AM on March 24, 2008
derail- OK, so since Diesel and #2 fuel oil are essentially the same Home heating oil has jumped upwards to $3.89 per gallon. How many MPG will my house get, and why is noone talking about the cost of heating one's home?
posted by Gungho at 8:11 AM on March 24, 2008
Diesel can be made from crude oil that is not as clean or pure as "light sweet crude." Only (?) light sweet crude can be made into gasoline, at least with today's refineries. So as we start to run out of that (which is definitely happening... we are pumping a lot more "sour" or impure oil these days), the cost of diesel's core components should go down. But the limited refining capacity keeps prices high.
posted by zpousman at 8:12 AM on March 24, 2008
posted by zpousman at 8:12 AM on March 24, 2008
Diesel, kerosene, jet fuel and home heating oil are all roughly the same thing. additives, taxes, blah blah but the base stock is interchangeable between them. that's why diesel prices always go up in the winter.
they can adjust the proportions of a certain batch to get more gas, or more fuel oil. not sure how much control they have, whether they can take bunker fuel and crack it into gasoline, i can't say.
posted by KenManiac at 8:21 AM on March 24, 2008
they can adjust the proportions of a certain batch to get more gas, or more fuel oil. not sure how much control they have, whether they can take bunker fuel and crack it into gasoline, i can't say.
posted by KenManiac at 8:21 AM on March 24, 2008
bkeane- it was cheaper to produce when sulfur didn't matter.
gungho- get a hybrid! Seriously, people do talk about it whenever a cold winter is predicted. But it's not as "immediate" because people usually buy gas and see the price changes more often than they see their heating oil bill. And because most of the country doesn't use oil to heat their homes.
gungho- Through cracking, they can adjust their yields, but only within a certain band. You have to have the molecules available in the crude to be able to crack into what you want.
posted by gjc at 8:21 AM on March 24, 2008
gungho- get a hybrid! Seriously, people do talk about it whenever a cold winter is predicted. But it's not as "immediate" because people usually buy gas and see the price changes more often than they see their heating oil bill. And because most of the country doesn't use oil to heat their homes.
gungho- Through cracking, they can adjust their yields, but only within a certain band. You have to have the molecules available in the crude to be able to crack into what you want.
posted by gjc at 8:21 AM on March 24, 2008
Best answer: You might be interested in some of the answers on this AskMe page.
posted by obliquicity at 8:23 AM on March 24, 2008 [1 favorite]
posted by obliquicity at 8:23 AM on March 24, 2008 [1 favorite]
Best answer: While Sparaxis post in your second link is correct, it is possible to make a very rough comparison of the costs for overall US production.
According to the US Department of Energy's current figures, the average retail cost of diesel is $3.38, with 63% of the cost going to crude oil, while gasoline has an average retail cost of $3.03, with 69% of the cost going to crude oil. Therefore, the cost of the crude oil used to make diesel is about $2.13 per gallon versus $2.09 per gallon for gasoline. This only compares the dollar cost of the oil, which won't correspond fully with the volume of oil, as different types of crude oil have different costs and produce different ratios of diesel and gasoline.
You can find the refining cost (including refining profit) on the same page, which is currently much higher for diesel. You can also check out history for the refining portion of the retail cost and see that it varies quite a lot (especially seasonally, as the relative demand for heavier fuels (diesel, home heating oil) versus than gasoline varies from winter to summer).
I don't see anything in this data to support the assertion (from your first link) that diesel takes 25% more oil to produce than gasoline.
You'll probably also be interested in this Powerpoint presentation from the same page: "Can U.S. Supply Accommodate Shifts to Diesel-Fueled Light-Duty Vehicles?"
posted by ssg at 8:30 AM on March 24, 2008 [1 favorite]
According to the US Department of Energy's current figures, the average retail cost of diesel is $3.38, with 63% of the cost going to crude oil, while gasoline has an average retail cost of $3.03, with 69% of the cost going to crude oil. Therefore, the cost of the crude oil used to make diesel is about $2.13 per gallon versus $2.09 per gallon for gasoline. This only compares the dollar cost of the oil, which won't correspond fully with the volume of oil, as different types of crude oil have different costs and produce different ratios of diesel and gasoline.
You can find the refining cost (including refining profit) on the same page, which is currently much higher for diesel. You can also check out history for the refining portion of the retail cost and see that it varies quite a lot (especially seasonally, as the relative demand for heavier fuels (diesel, home heating oil) versus than gasoline varies from winter to summer).
I don't see anything in this data to support the assertion (from your first link) that diesel takes 25% more oil to produce than gasoline.
You'll probably also be interested in this Powerpoint presentation from the same page: "Can U.S. Supply Accommodate Shifts to Diesel-Fueled Light-Duty Vehicles?"
posted by ssg at 8:30 AM on March 24, 2008 [1 favorite]
You can make gasoline and diesel from any grade of crude, but the yields depend on the type of refinery being used. The simplest "topping" refinery will produce a yield something like this (for the West Texas Intermediate grade):
Butanes, lighter 2.3%; LSR gasoline 7.8%; Reforming naphtha 28.4%; Kerosene 11.9%; Diesel 15.7%; Low sulfur VGO 24.2%; Low sulfur resid 9.7%;
These are further upgraded and then blended to make gasoline and diesel. Now, as the crude gets heavier you get a higher yield of diesel over gasoline (but less of both).
And when you have fancy refineries (e.g. those with hydrocrackers, reformers, cokers, etc.) then the yields change again. Further complicating the picture is the ability of refiners to tune, in effect, their product yields according to what will sell for the most at market.
If diesel were adopted more as a car fuel (say, to the level that it is in Europe and other parts of the world) then you would see refiners running heavier crude slates, tuning their cuts to make diesel, and trying to meet demand. The diesel "crack" (currently at an all-time high of $20.35 over the cost of crude) would go even higher and the gasoline crack (currently $9.20 over crude) would drop. It is certainly possible that a gallon of gasoline could cost less than a gallon of crude.
posted by bloggboy at 8:36 AM on March 24, 2008
Butanes, lighter 2.3%; LSR gasoline 7.8%; Reforming naphtha 28.4%; Kerosene 11.9%; Diesel 15.7%; Low sulfur VGO 24.2%; Low sulfur resid 9.7%;
These are further upgraded and then blended to make gasoline and diesel. Now, as the crude gets heavier you get a higher yield of diesel over gasoline (but less of both).
And when you have fancy refineries (e.g. those with hydrocrackers, reformers, cokers, etc.) then the yields change again. Further complicating the picture is the ability of refiners to tune, in effect, their product yields according to what will sell for the most at market.
If diesel were adopted more as a car fuel (say, to the level that it is in Europe and other parts of the world) then you would see refiners running heavier crude slates, tuning their cuts to make diesel, and trying to meet demand. The diesel "crack" (currently at an all-time high of $20.35 over the cost of crude) would go even higher and the gasoline crack (currently $9.20 over crude) would drop. It is certainly possible that a gallon of gasoline could cost less than a gallon of crude.
posted by bloggboy at 8:36 AM on March 24, 2008
It is certainly possible that a gallon of gasoline could cost less than a gallon of crude.
This hurts my head.
Are you saying there's sufficient profit in the other products of the crack that gasoline can be sold at a loss?
Sorry, that does not compute for me- perhaps you could elucidate more?
posted by pjern at 5:26 PM on March 24, 2008
This hurts my head.
Are you saying there's sufficient profit in the other products of the crack that gasoline can be sold at a loss?
Sorry, that does not compute for me- perhaps you could elucidate more?
posted by pjern at 5:26 PM on March 24, 2008
pjern: Precisely. Gasoline is only a fraction of the barrel if you own a simple "pipestill" refinery. If there's enough of the stuff floating around, kind of as there is now, it will sell for very cheap. To give another example, take the price of asphalt which is also a product of the refinery (some would say byproduct). Asphalt doesn't cost as much per barrel as crude, yet refiners still sell it. So you can see that refiners usually make the big bucks by upgrading low-quality residual bottom-of-the-barrel stuff. A lot of money is made by turning the grungy stuff into e.g. higher spec diesel.
So, for example, not all refiners are making money these days (especially those in China and Singapore). Part of this has to do with shipping costs, but it's also simply due to the fact that prices aren't high enough to compensate the refiner for doing his job. In this case, they usually cut production.
There have been several instances over the years where gasoline has sold for less than the price of sweet crude (not accounting for taxes).
So, to summarize the issue: 1) yields of gasoline/diesel vary significantly among refinery and 2) prices can do whatever they dang well please, often without justification.
posted by bloggboy at 7:33 PM on March 24, 2008
So, for example, not all refiners are making money these days (especially those in China and Singapore). Part of this has to do with shipping costs, but it's also simply due to the fact that prices aren't high enough to compensate the refiner for doing his job. In this case, they usually cut production.
There have been several instances over the years where gasoline has sold for less than the price of sweet crude (not accounting for taxes).
So, to summarize the issue: 1) yields of gasoline/diesel vary significantly among refinery and 2) prices can do whatever they dang well please, often without justification.
posted by bloggboy at 7:33 PM on March 24, 2008
I'm guessing that what bloggboy was going for here is the idea of a negative "crack spread." First up, the crack spread is the difference between the price of a barrel of crude and the amount of money you can sell the processed goods for (usually based on the 3:2:1 WTI...)
There is an inherent overhead cost (which is affected by things like maintenance, catalyst, materials etc and doesn't vary that greatly) in processing crude oil into various forms (gasoline, diesel, jet fuel, etc). If the margin of the "crack spread" dips below the inherent overhead cost, the refinery/company is, in effect, spending more to turn the crude into gasoline than the gasoline is worth. There have certainly been cases of this in the past.
Or, on preview, what bloggboy said....
posted by conradjones at 7:36 PM on March 24, 2008
There is an inherent overhead cost (which is affected by things like maintenance, catalyst, materials etc and doesn't vary that greatly) in processing crude oil into various forms (gasoline, diesel, jet fuel, etc). If the margin of the "crack spread" dips below the inherent overhead cost, the refinery/company is, in effect, spending more to turn the crude into gasoline than the gasoline is worth. There have certainly been cases of this in the past.
Or, on preview, what bloggboy said....
posted by conradjones at 7:36 PM on March 24, 2008
As a little illustration to what bloggboy is talking about, check out this PDF, which shows the crack spreads for major oil products recently. Note that gasoline dipped relatively near to the $0 line late last year. Jet fuel / kerosene and diesel (No. 2) are the products that have higher crack spreads.
posted by ssg at 7:44 PM on March 24, 2008
posted by ssg at 7:44 PM on March 24, 2008
This thread is closed to new comments.
It is true that the base comparison is flawed, it's not one or the other. Old school refining simply boiled the crude and distilled off the base components to extract the fuels- you got whatever was in the base crude oil. Modern refining techniques can crack the hydrocarbon molecules into smaller sizes to push the production toward gasoline and other lighter fuels. If demand goes up for diesel, refiners will adjust to extract the most profit out of each barrel of crude.
Regardless, it would be incorrect to adjust the MPG rating of the vehicles down. The vehicle will use X gallons for Y miles. Doesn't matter to the car or the driver how that fuel is produced- to go Y miles, I have to buy X gallons. MPG isn't there to measure the efficiency of the supply chain, it's there to measure the efficiency of the vehicle.
It's up to the refiners to figure out and price the difference. If it's true that it takes more crude to make diesel, the cost of the diesel will go up. That doesn't change how efficiently the car uses the fuel, it only changes what the cost to operate the vehicle is.
posted by gjc at 7:34 AM on March 24, 2008 [1 favorite]