Diesel Fuel Prices Are Effecting Everything Find Out Why.

Originally designed in 1892 to be used in the compression ignition engine named after it’s inventor Rudolf Diesel. Diesel Engines have the ability to run on a wide variety of fuels, such as diesel fuel and modified vegetable oil. The most commonly useddiesel fuel is refined from crude oil. This fuel is most widely used by commercialbusinesses to deliver goods to the market and to fuel some commercial machinery. Due to its effect on the economy it is important to understand how the fuel is produced.

Diesel fuel is produced to different levels of distillates or grades. Distillates are simply liquids that have been distilled or refined to a certain grade. The most common distillate used by diesel engines in the United States is No.2. This fuel can also be used for heating. Distillate No. 2 is used because it has a low amount of sulfur. Due to new regulations effecting sulfur content in diesel fuel Low Sulfur Diesel (LSD) fuel was replaced by Ultra Low Sulfur Diesel (ULSD) fuel.

Low Sulfur Diesel fuel contains a maximum of 500 parts per million (ppm) sulfur. Ultra-Low Sulfur Diesel fuel contains less than 15 ppm. By 06/01/06 80% of the vehicles on the highway must be ULSD. By 12/01/2010 100% of vehicles on the highway must be ULSD. It has been estimated that almost all diesel fuel used in the USA will be ULSD by 2015.

A barrel of crude oil can produce many products including liquefied petroleum gases, heavy fuel oil, jet fuel, diesel fuel, gasoline and heating oil. Vegetable oil can also be used in conjunction with other ingredients to produce Biodiesel. Biodiesel can also be made from animal fats or recycled restaurant grease. This biodegradable fuel has proven to reduce the emissions of particulate gases.

The primary fuel used in delivery vehicles, trains, buses, boats, semi trucks, and construction equipment is diesel fuel. Vehicles on the highway used 75% of diesel fuel in 2007. Off-highway equipment such as motors used in railroad, military, farming and construction used the remaining 25%.

The United States imported approximately 4.5% of its diesel fuel from foreign countries In 2007. Canada and the Virgin Islands were the major contributors. However 66% of the crude oil used to produce the diesel fuel was imported from foreign countries in 2007. After production most diesel fuel is transported either by rail, pipeline or barge from the refineries to gas stations across the country.

Due to increased demand and a decrease in production diesel fuel has cost more than gasoline since September of 2004. Worldwide demand for diesel fuel has steadily been increasing in Chine, Europe and the U.S. Production has suffered because of the transition to Ultra Low Sulfur Diesel fuel in the U.S. The Federal excise tax also contributes to the price difference. The tax for diesel is six cents higher than for gasoline.

As countries become more modernized their demand for crude oil increases. In recent years the demand for crude oil has gone up and the supply has gone down creating an increase in the price. The Organization of Petroleum Exporting Countries (OPEC) controls approximately 2/3 of the world’s crude oil reserves. OPEC sets a maximum production limit on 40 percent of the world’s crude oil reserves. This limit on production will continue to have negative effects on the price of diesel fuel.

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