Why Are Diesel Prices So High?
Some claims making the rounds on social media start with an observation that is basically correct: crude oil was more expensive after Russia invaded Ukraine in 2022 than it is today, yet diesel prices are now higher. The conclusion often attached to that comparison is that refiners must be gouging consumers. It sounds plausible because crude oil is the main raw material used to make diesel. But…
Die diesel prices are soaring, despite crude oil costs being lower than they were in 2022 after Russia's invasion of Ukraine. Critics often blame refiners for price gouging, but this is an oversimplification. The real issue lies in the refining process that transforms crude oil into diesel. Refining capacity is currently in short supply, leading to higher diesel prices even if crude prices remain stable.
The refining margin, which measures the difference between diesel and crude oil prices, has surged to record highs. This indicates that diesel is becoming pricier relative to crude oil, not the other way around. Factors such as refinery outages, export restrictions, and disruptions in the Middle East have contributed to the diesel shortage.
U.S. refineries have been operating near full capacity, but global diesel supplies have been disrupted by various events. While refiners are earning significant profits, high profits do not necessarily mean price gouging. Instead, high refining margins suggest that refiners are taking advantage of the market situation.
Written by urgent.news from OilPrice's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
