Supply and Demand: Diesel is a byproduct of crude oil refining, and its demand is driven primarily by the transportation sector, particularly freight shipping and commercial trucking. The global supply of diesel is generally tighter compared to gasoline due to increased demand from industries and limited production capacity.
Economic Growth: Diesel is heavily used for commercial activities and freight transport, which tend to be more sensitive to economic growth. As the economy recovers or experiences strong growth, the demand for diesel fuel rises, putting pressure on prices.
Refining Complexity: Diesel fuel requires a more complex refining process compared to regular gasoline. This complexity adds to the production costs and can impact the overall price.
Taxes and Regulations: Diesel fuel is subject to different tax structures and regulations in various jurisdictions, which can affect its final price at the pump.
Geopolitical Factors: Global geopolitical events, such as supply disruptions, trade disputes, or conflicts in major oil-producing regions, can impact the supply and price of crude oil, subsequently affecting the prices of both gasoline and diesel. Since diesel demand is more concentrated in certain sectors, it can be more susceptible to these geopolitical influences.
Demand for Sustainable Alternatives: The increasing push towards sustainable transportation has influenced the demand for alternative fuels, particularly in the passenger vehicle segment. This shift in demand can lead to a surplus of diesel fuel relative to gasoline, potentially contributing to price differences.
Storage and Transportation Costs: Diesel has different storage and transportation requirements compared to gasoline, which can add additional costs to the supply chain and contribute to price variations.
