Why is diesel so expensive?
More and more often I come across comments that compare the prices of crude oil and diesel in 2022 and today and ask the following question:
Why is diesel at gas stations more expensive today, given that crude oil is cheaper compared to 2022?
At first glance, the question is logical. However, this applies assuming that the mark-up on the price of oil refining is the same over time. Yes, but it is not.
In fact, the global economy is reporting record refining margins. In the US, they have already reached $100 per barrel - up from about $40 before the war. This means that if the price of oil today is $85, then diesel fuel is sold for $185 per barrel. Accordingly, the final price of diesel is extremely high and practically detached from the price of crude oil. Refineries are making a healthy profit - it is clearly visible in their financial statements.
The market for various types of fuels is just as global as that of crude oil. Gas station chains buy fuels, not crude oil. So the final price is completely logical.
What are the reasons?
1. Loss of fuel exports from the Persian Gulf and Russia. This is especially true for diesel, because the varieties of oil from the Middle East and Russia are the best for the so-called middle distillates - diesel and kerosene.
2. The high prices of diesel in the USA are largely due to record exports to Europe. American companies are making money.
3. The high prices of diesel in Europe are mainly due to the shortage of refining capacity, that is, to the long-term European policy of destroying this business on local soil.
Unfortunately, proposals to limit fuel exports in order to keep their prices within certain limits are already being discussed in the US. In view of the upcoming elections, it would not be surprising if Trump did something similar.
For some of the largest countries in the European Union, such a development would be catastrophic.
Here we still have Lukoil Neftokhim, which can produce much more than our domestic needs. As long as the company is allowed to operate normally, of course...