RVers Wonder Why Diesel Fuel Prices Are So High
RVers can blame the Chinese, Europe and Congress for higher diesel costs. Diesel engines have been around since their invention in 1892 by a German engineer named Rudolf Diesel. Highway use is 75% while off road use by agriculture, railroad, construction, military and marine craft account for only 25%.A big part of the reason diesel prices have increased is because in 2006 fuel emission standards kicked in and instead of being 500 parts per million (ppm) sulfur content our legislators are requiring 80 ppm. A barrel of crude oil is now around $110 and out of that barrel we squeeze 7.8 gallons of diesel fuel and 19.4 gallons of gasoline. So why are diesel prices now higher than gasoline prices? “Worldwide demand for diesel fuel and other distillate fuel oils has been increasing steadily, with strong demand in China, Europe and the U.S. putting more pressure on the tight global refining capacity.” You can read more on this issue at the Government Bookshelf.
Another reason for the price difference is the Federal excise tax which is six cents a gallon higher than on gasoline (thank you Congress). In fact a full 20% of each dollar you pay for fuel is pure tax. Not to be outdone California tacks on another 7.25% tax on top of the Federal excise tax already in place and they still can’t seem to fix their roads. Biodiesel, mostly made from soybean oil, mixes 20% biodiesel with 80% petroleum diesel (B20) and helps lubricate your engine because when they produce the ultra low sulfur fuel it removes much of the lubricity. But don't be confused by biodiesel, because it will not reduce the price, in fact, it actually increases the costs of the refining process. This is not just a problem for RVers, it’s a problem for everyone because it drives up prices for everything (inflation) delivered by diesel powered trucks, trains and cargo ships.
Almost everything you buy has the increased price of diesel factored into the final cost. I think I will be writing my representatives in the Congress and Senate about this. The economy is already in a recession and these additional taxes on fuel don’t help. If the government really wanted to “kick start” the economy it would help by eliminating the fuel tax all together. If you value being able to drive or pull your RV around the country you may want to consider writing a few letters to your Congress person yourself. Helping you stay on the RV road - Jim Twamley, Professor of RVing.
Hat tip to David Cole on the Country Coach Blog for this lead.
Labels: fuel
posted by Jim Twamley at
3/16/2008 09:19:00 AM
27 Comments:
Jim, I don't know if you have a diesel or not, but what do you do about these latest price rises in all types of fuel.
Travelin' A's
From Texas
By
Fred, at March 16, 2008 7:31:00 PM PDT
Add Ultimate ME2 to your fuel, gas or diesel and you will save, cause your vehicle will run better and go farther on a tank; 10% or more, gas or diesel; end of story. It really works.
By
Ionfuel, at March 17, 2008 3:50:00 PM PDT
Travelin A's from Texas. Yes, I have a motorhome with a 330 Cumins Diesel. What do I do about the rise in fuel prices? 1. I drive slower. 2. I make investments that are tied to the price of oil to help offset the cost. 3. I just shake my head while I fill the tank. Thanks for your readership. Jim Twamley
By
Jim Twamley, at March 19, 2008 5:10:00 PM PDT
Jim, We read just about everything you publish on this site. You're an asset to RVing. Well, I have the Dodge Ram 2500 with Cummings diesel and pull a 32' 5er. My milage is about 14 mpg tops while pulling.
We toured the Canadian eastern maritimes for 6 months last year and it made us make some adjustments. Like you, we slowed down. But, that is easy to do up there since the speed limits were 80 kph or less. Of course you can go from campground to campground in one hour.
As you know, in the western U.S. (especially Texas), it of course takes 4 to 6 hours between campgrounds of choice.
Happy RVing! Fred and Mary Acree
By
Fred, at March 20, 2008 6:05:00 AM PDT
With respect to fuel taxes...
While I do consider myself a conservative, I actually wanted Congress to match fuel price increases with tax increases - A few years ago. If they had done that, it would have doubled the rate of increase on fuel and forced reductions in extraneous use 3 years ago. Of course, I also would have directed the extra revenue towards debt retirement, which would have kept the dollar much higher. I estimate that this tax - 3 years ago - would result in gas being less than $2/gallon today. But, it is too late to do that now.
By
SHvnDave, at March 22, 2008 4:50:00 AM PDT
I believe this spells the end of RVing as we know it. It will be an activity for the rich and as fuel approaches $5 a gallon and higher. More and more will drop out. Just a few of the RV manufacturers will survive as people struggle to pay their bills and for food. Already restaurants in my area (Orlando) are becoming sparse in attendance. I personally know of at least 5 Rvers who are selling their rigs and going back to a permanent residence. Our govt has failed us! Just my opinion.
By
Anonymous, at March 22, 2008 4:52:00 AM PDT
I agree that some of the fuel price problems are the ridiculous environmental factors and greed of our leaders. However, the world is swimming in oil. Our oil and fuel reserves (except for ULSD which has a capacity problem) continue to grow each month.
Demand for fuel, especially diesel, has actually dropped in China and India. In the US, our demand has dropped also. The real problem is the speculators who have driven up the price of all commodities. These same speculators continue to spew the propaganda of "turmoil in Nigeria", "a cold snap", etc etc in an attempt to control the market. All of these factors have been in place for the last 40 years!
We need to take control of our country and eliminate the special interests that will ultimately result in the elimination of the middle class and the destruction of our country.
Sorry you drank their Kool-Aid and continue to spew their lies.
-Bob
By
Anonymous, at March 22, 2008 5:44:00 AM PDT
Here in eastern WA state, my husband has pretty much stopped using his diesel truck for everyday travel. He parked his Dodge Ram 3500 truck and now uses an old, little junker gas-powered vehicle to drive to work.
But when we need its muscle to pull our 5th wheel, we will still use the truck. Our diesel has been $4.19 since at least a week ago, so if the price has gone up more, we're just gonna cringe. We hope to retire and do more RVing in a couple years, but the escalating price of travel will force us modify our round-the-US trip plans.
At least RVs still give us the empowerment to dry camp so that we can work in some cost savings along the way. And in addition to participating in a variety of events, along the way we also will be visiting friends and relatives who don't live in areas that bar RVs from parking in driveways or curbside too. We'll try to employ more of the strategies to maximize the savings effect of this to offset rising fuel costs.
But the cost of fuel will comete with the funds to pay to stay at RV parks too. This also means we won't be staying in RV parks as often as we otherwise would, and the wave of us who need to do this to continue to afford RVing will unfortunately hurt the bottom lines of RV park owners - and I hate the thought of that. I love that most RV park owners show love for the whole RV scene and have invested a lot to create comfortable spots to stay with full hook ups and safe environments, something we like to use alternately between our dry camping sessions. RV park owners deserve a return on their investment too but like the whole whole RV industry, they undoubtedly also are feeling financially cramped by this economic downturn - especially the smaller "Mom and Pop" operations.
Closer to home though, I cannot worry about the bigger picture when I am occupied with concerns of how the diesel and gas prices are hurting my own bottom line and making it harder for my husband and me to get where we need to be financially, so we can elect to retire. The bar keeps getting set higher. Grrr!
By
Anonymous, at March 22, 2008 5:56:00 AM PDT
Here's a kicker. I have plans for a bio-diesel plant for about $250, but, when I mentioned it to my mechanic, he said, don't waste your money. The restaurants in my area are selling their used cooking oil for biofuel. Plus, methanol isn't cheap. It will cost more than buying diesel fuel.
By
ming1, at March 22, 2008 5:58:00 AM PDT
My wife, and I, and our friends, have been planing a trip out West for almost 2 years now (we live in SC). As much I shudder when I see the price of fuel going up, up, up, we can't, at this point, 'back down'. We'll make use of more membership campgrounds, Famcamps and an occasional Wally world in between. From what I see my fuel costs just went from $3.25 to $4.25 at minimum. Oh my, Oh my. (I'll see about getting some Ultimate ME2) . .Buzz
By
Buzz, at March 22, 2008 7:37:00 AM PDT
Jim, good analysis of a complex situation. Here's my 75c worth. I travel a lot in CA (35' DP) in my job, and talk with lots of park managers and dealers. Parks have level or increased summer bookings, rvers traveling shorter distances. Some dealers are way off, others holding their own. As usual in any business cycle, marginal operators will fail, good ones adapt and survive.
My tech is busier than ever, lots of folks doing major upgrades to their rigs rather than buying new.
I think unless we hit $6-8/gallon people will adapt. Expect a comeback when the mortgage crisis abates.
Thanks for a great publication!
Big Bubba
By
Lynn, at March 22, 2008 8:09:00 AM PDT
When you hear Exxon/Mobil making $26 BILLION in PROFIT that should tell you where a big part of the money is going!
By
Anonymous, at March 22, 2008 9:52:00 AM PDT
"The real problem is the speculators who have driven up the price of all commodities. These same speculators continue to spew the propaganda of "turmoil in Nigeria", "a cold snap", etc etc in an attempt to control the market."
Bob has "hit the nail on the head". The price of fuel is not currently driven by the free market (supply and demand), but by the greed of the speculators. They use a phony "excuse-of-the-day" to justify the outrageous crude oil prices. They will keep increasing the price until a "pain point" is reached and they face a backlash. So far this hasn't happened. There has been no backlash from our "do nothing" Congress or from the citizens (no trucker boycott, etc.). Over the past two years they have started the price run-up to the peak driving period earlier and earlier. Be prepared for ever escalating prices until "we" say "no more" with an organized action that hits them at their weakest point, storage capacity.
Carl G.
By
Anonymous, at March 22, 2008 10:03:00 AM PDT
Much (most?) of the problem is not that oil prices have increased. It's that the value of the US Dollar has plummeted.
For most of this new 21st Century, the Republicans overtly sought to borrow and spend as much as possible. They succeeded. Without any willingness to impose the taxes that are necessary to repay such monumental debt.
Now they're printing money completely unsupported by any productivity - anything of value - and ... surprise! ... those Bush Dollars are worth less!
It should be no surprise that all of us who tolerated such irresponsibility are paying for it.
By
Anonymous, at March 22, 2008 11:43:00 AM PDT
To Jim Twamley: It is 15 ppm not 80ppm limit on sulfur for diesel fuel now. Also there are other factors that cause the increases in gas and diesel. For 30 years no new distilleries have been built,and we are more than 60% dependent on imported petroleuum.
By
Anonymous, at March 22, 2008 1:14:00 PM PDT
A couple or recent articles about fuel prices etc. can be found at the links that follow. We were just in Mexico paying about $2.08 for diesel - we are going back to Mexico. Another contributing factor to the cost of RVing these days is the high rates some RV parks are charging. Our daily costs continue to rise. We can't afford to stay in some RV parks. We are on the road fulltime and do not usually stay in one place very long. Daily rates of $40 or more add up to over $1,200 per month. In our case this is for very little water or electricity - just need a place to park for the night. Between fuel prices and RV rates they are going to force more and more of us off the road. With fewer customers some may raise prices still more. RV parks need to take a close look at the bottom line and find a way to reduce our costs or the entire industry will suffer. Here are some fuel stories of interest......
http://www.msnbc.msn.com/id/23757347
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=BWK&date=20080321&id=8373065
By
Anonymous, at March 22, 2008 1:32:00 PM PDT
We just returned from a 6 weeks trip to Mexico and drove 3000 miles. Gas was $2.40 per gallon and diesel was $2.00 using the exchange rate of 1 US $=10.80 pesos. Mexico now sells the ultra low sulphur diesel. Of course Mexico don't have Exxon/Mobil and all the other private gas companies operating there.
By
Anonymous, at March 22, 2008 4:20:00 PM PDT
Big oil gobbling up the smaller companies certainly doesn't help. Nor does Texas big oil in the white house. As someone above mentioned, this administration has beat the dollar in to the ground in an attempt to bail out wealthy people with large stock portfolios.
The chickens have come home to roost!
By
Anonymous, at March 22, 2008 5:12:00 PM PDT
Some good points made Jim, but I have to disagree with you on several. Reducing state and/or federal fuel taxes will not lower fuel costs! We will just be throwing that extra money into the oil companies profit sheet. As we have traveled coast to coast, its the market place - I think the oil companies call it "zone pricing" - is what determines the price.
If you look and read about Exxon's last statements to their shareholders it was stated that Exxon had NO intention to increase production until 2012. The oil expert from one of the German banks asked the first question - why not? In their convoluted rambling answer it basically came down to the point that they wanted to keep their profits up and felt that they didn't need or was responsible to ease the fuel costs to the consumer.
As several others have pointed out the bizarre policy decisions of the current administration has also added to the costs. He has truly paid back his oil friends for their support.
It has also been showen that the arguments of refinary switch-over and limiting refinary expansion are bogus reasons and self-imposed by oil to keep the squeeze on the consumer.
One question I have is why have we allowed our railroad technology lag so far behind Europe and Japan and still think that its more effecient to ship one container at a time by truck? I would really like some "logical" explanations to that!!
Oh well, I'll just stay off of I- 10 so I don't get rolled over by the truckers and travel shorter trips and stay a little longer!!
Keep up the good work. Enjoy reading your posts.
By
Anonymous, at March 22, 2008 8:03:00 PM PDT
Wow is nobody looking close to home look at our last few Presidents (Bush)where are they from ? TEXAS .......
who do you think support there campaigns.. BIGGEST is EXXON enough said ..........
By
Anonymous, at March 23, 2008 8:34:00 AM PDT
Diesel is $4.20 here in the Central Valley of California, and gasoline is $3.65 a gallon. I'm planning on buying a new vehicle in the next six months to use as a daily driver and tow, since I'm not rich and have to make payment, I'm budgeting fuel at $7.50 a gallon, by the time I get the vehicle paid-off. My current car I had budgeted $4.00 a gallon, I did pay it off last year so I was off on the price of fuel by .75 cents (savings), but I could go when and where I wanted and could afford it! If you don't plan on raising fuel, food, insurance (health, vehicle, RV, house, etc.), maintenance, to name a few items, your not realistic if you don't include those items, and only look at the per monthly payment the salesman is pushing on you! Whatever you are driving if you cannot afford to pay $7.00 a gallon in the next two years your driving the wrong vehicle, sorry but that what's going to happen due the world demand for fuel!
By
G William, at March 23, 2008 10:05:00 AM PDT
An issue is that the value of the dollar compared to toher currencies has lost 22% of it's value since last June. It now takes more dollars to purchase the same goods and services and fuel that we purchased this time in June. We will see more increases in all goods and services that we purchase until the value of the dollar stabilizes.
WhitofOK
By
Lloyd Haskins, at March 23, 2008 3:30:00 PM PDT
When you really investigate the problem, the US goverment and Wall Street(speculators) become highly suspect.
When one company can make a 46 billion profit all other reasons other than greed are not to valid.
As someone who has worked at the port of Valdiz and seen most of the Alaskan oil shipped to Japan(higher profits)I can't believe the american people have bought into the propaganda the US Goverment and oil companies have entrenched into us.
By
Anonymous, at March 23, 2008 5:19:00 PM PDT
It would seem that one of the ways to at least slow some of the increases is to really support those retailers who don't import middle eastern oil. Companies like Sinclair, Conoco, Sunoco, etc. If those profits went up perhaps it would send a message.
I have heard that there is more oil off the east coast of Florida and in the gulf than there is in Saudi Arabia and that there is a company, Canadian I think, that will take on the task and make sure that there are not any problems. Looking back I think that the enviromental problems have been caused by spills from ships. I is also my understanding that with the technology that is available to do underwater exploration and production that it is very safe and do-able.
Maybe we all need to realize that EVERYTHING is tied to oil. I, for one, would rather be paying high diesel prices that are going to companies that are not sending that money out of the county to the middle east or Venizuela(sp) or anywhere else but the good old US of A.
I think I'll write an e-mail to my congressmen and senitor. Maybe if enough folks do it enough times the idea will get through to them. If not then as far as I'm concerned those "representitives" are just like the oil companies; just plane crooks.
By
Anonymous, at March 23, 2008 9:21:00 PM PDT
Your information regarding the rapid rise in fuel prices is correct as far as what the oil companies and politicians want the public to know. For example, oil reserves are much higher than publicly admitted and they haven't told the public that Europe has excess diesel refining capacity or China has new refining facilities coming on-line in the very near future to refine the known oil reserves in the China Sea. Not to mention excess Russian or Malaysian oil reserves and refining capacities. In other words, they have plenty of room to make more diesel and or gasoline for export.
Now, go back in history to when Harry S. Trueman met with the Saudis' in 1946 to establish the American dollar as the benchmark oil currency. Part of the agreement was to refund back to the US government a portion of the cost of every barrel of oil purchased through the purchase of treasury bills.
Now moving forward to the last five years. There's not a single American politician that will publicly declare the need for a tax increase to fund the invasion of Iraq. Where do you think that funding is coming from? What you pay at the pump today is a direct affect of the $13 billion per month to fund the Iraq invasion. This is not a conspiracy theory folks, it's in the history books and can be easily verified. Just look at who the single largest buyer of US T-bills is today.
By
Anonymous, at March 24, 2008 10:43:00 AM PDT
Many RV parks are doubtlessy going to see a reduction in business. Some of the "mom and pops" are going to go under. We may see some price reductions; but it's even possible that some parks may RAISE their prices to soak the people who can still afford to travel by RV and recover their losses.
Expect to see increased pressure from park owners to shut down Wal-Mart camping, as well as close down boondocking sites on Forest Service and BLM land, and pressure to raise the fees in state parks.
By
Anonymous, at March 26, 2008 9:48:00 AM PDT
The tree huggers & Liberal Socialists Democrats will NOT let the oil companies drill "ANYWHERE IN THE U.S.A". We cannot build a
nuclear power plant anywhere in the
U.S.A. The demand for fuel is going
up but our supply "IS NOT".
We need to become "FUEL INDEPENDANT" & LOWER THE GOVERNMENT TAXES.The government produces "NOTHING" and like a "HIGHWAYMAN", robs from us all!
Direct your fuel price anger at the real villian, THE POLITICIANS & THEIR THIRST FOR TAX REVENUE FOR
HANDOUT PROGRAMS.
The tax on fuel is based on PERCENT of 1 Dollar so as the cost of fuel goes up so does the tax go up.
By
Anonymous, at March 26, 2008 6:09:00 PM PDT
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