Why Do Diesel Fuel Prices Go Up?

Written on: November 6, 2023

What Factors Go into The Cost of Diesel?

cost of diesel Downey Energy delivers off-road and on-road diesel in the Hudson Valley. We can also set you up with fuel pumps and tanks. Do you have a fleet of vehicles? You can also count on Downey Energy for bulk diesel delivery .

You may have noticed a recent increase in diesel prices and wonder what’s behind them. In part it’s traders’ fears that refineries will not be able or willing to meet global demand. Let’s take a closer look at the factors that affect the price of diesel fuel.

The price you pay for diesel fuel has four components:

The Cost of Crude Oil

The cost of crude oil is the largest determinant of the retail price for diesel fuel. According to the US Energy Information Administration, the cost of crude oil accounted for 50% of the cost of on-road diesel fuel from 2003 to 2022. Worldwide supply and demand affect the cost of crude oil. The demand for diesel fuel usually follows economic trends because it’s such a major transportation fuel.

Transportation Costs

The American Gulf Coast is the source of about 50% of U.S. diesel fuel production. Transportation costs tend to increase the further the distance the commodity needs to be transported. That is the case when it comes to diesel fuel. In areas farther from the Gulf Coast, diesel fuel prices tend to be higher than in areas closer to the Gulf Coast.

Regional Operating Costs & Local Competition

The cost of diesel fuel is also a reflection of local market conditions and factors. The cost of operating can vary greatly based on location, and those costs are passed on to the consumer. Local competition can also affect prices. The more companies competing in a region, the lower they tend to keep the costs of their product so as to be competitive. As a consumer you benefit from having options. Plus, having a diesel fuel provider like Downey that deals in high volume diesel delivery will also all but guarantee you’ll get a lower price versus from a company that doesn’t sell a high volume of diesel.

So next time you notice an increase in the cost of your diesel fuel, you’ll have a better understanding of the factors at play.

You Can Depend on Downey

Downey Energy has been serving residential and commercial clients in the Hudson Valley for over a century. We have earned the loyalty of our customers through our dedication to service and reliability.

From Cortlandt Manor to Carmel, all around Dutchess County, Orange County, Putnam County and northern Westchester County, Downey Energy is here to make sure our Hudson Valley customers have the on-road and off-road diesel they need.

Downey Energy provides reliable and safe fuel services. Contact us today to learn more or to request delivery of on-road and/or off-road diesel fuel.