One of the top comments on Thursday's post says diesel was cheaper than gas when it was 500 ppm sulfur, and the 15 ppm rule flipped it. Plenty of you had other answers, from ethanol and taxes to greed.
Short version...in 2004 the world's appetite for diesel took off while diesel stocks ran low here. Our refineries have since turned up the diesel side and ship the extra overseas, so your pump price follows the world's. The sulfur rule and diesel's extra taxes run around 20 cents a gallon combined. That's about a dime of every dollar in this gap. Even last year, when the gap averaged 56 cents, they came to under half of it.
The Board
- Diesel...6.529 on the government's weekly survey, week of Sept 21
- Regular...4.478
- Gap...2.051, the biggest in dollars since the survey started in 1994
- Midwest gap...2.294, widest of any region
- North Dakota...6.21 diesel, 4.26 regular on AAA, Sept 26
- Texas...5.90 diesel, 3.94 regular on AAA, Sept 26
In raw dollars 6.529 is a record. After inflation, July 2008 was still higher and June 2022 was about even.
You Remember It Right
From 1994 to August 2004, diesel was the cheaper one 270 weeks out of 545. Basically a coin flip.
It ran cheap mostly in spring and summer, when driving season pushed gas up. Winter usually pushed it back over, because diesel and heating oil come off the same cut.
The Week It Flipped
August 30, 2004. Diesel 1.871, regular 1.866.
Diesel had gone over gas every year heading into winter. This time it didn't come back under in the spring. It stayed over 51 weeks straight, the longest run the survey had seen.
- Through 2009 it still dipped under now and then...45 weeks out of 279
- Since 2010...7 weeks out of 873
- The last one was August 24, 2015. It has cost more every week since, 578 in a row
Now Check The Theories Against That Date
These came after the flip. Some of them widen the gap now, but none of them could have started it:
- 15 ppm sulfur rule...refiners didn't have to make it until June 2006. Diesel was still 500 ppm for 92 weeks after the flip and cost more than gas in 79 of them. The rule does cost money, about 13 cents a gallon in today's dollars going by what stations charged for it in 2007 and 2008
- Ethanol...the federal mandate came with the 2005 energy bill. In 2003 ethanol was only about 2% of gas
- Light shale crude...US oil production kept falling until 2008. The shale boom that turned it around came after
- Ship fuel rules...2015 off our coasts, 2020 worldwide
- Refinery closures...Philadelphia shut in 2019 and the wave in Thursday's post started in 2020. US capacity is still about 7% bigger than in 2004
These were already true in 2003, when diesel was the cheap one:
- The first sulfur cut to 500 ppm...October 1993
- Taxes...the federal diesel tax has run 6 cents over gas since 1984. With the states it averages about 8 cents more today. North Dakota and Texas tax both fuels the same
- Cheaper to make, less refining, more energy per gallon...nothing about that changed in 2004. Both come out of the same barrel, and a refinery sells each one for what buyers will pay
- Greed and traders...refiners wanted top dollar in 2003 too, and traders were betting on both fuels. What changed is what diesel could bring
So the answer has to be something that changed in 2004.
What Flipped It
EIA flagged that same week in March 2005. Here's what it pointed to that year.
- Diesel stocks ran low that winter while gasoline stocks ran high
- World diesel demand jumped, led by China. China's oil use rose 15% in 2004, per IEA, and China burned about twice as much distillate as gasoline
- Buyers on the Atlantic side and in China were chasing the same diesel cargoes
- US diesel and heating oil demand was growing faster than gasoline, and Europe's new cars were going diesel
EIA figured gas would go back over by early April 2005. Diesel stayed on top until late August.
Why It Stayed Over
- US refineries pull about 30% of every barrel as distillate now, up from 24% in 2004
- Road diesel use here grew about 14% from 2004 to 2019, per EIA, and home heating oil fell more than 40%. Total US distillate use is about where it was in 2004
- The extra goes on ships. Exports went from about 110,000 barrels a day in 2004 to 1.25 million last year
- Diesel and gasoil are nearly 30% of the world's oil demand, per IEA. Here distillate is about 19% and gasoline 43%
Once American diesel can go on a ship, your pump price follows what the rest of the world will pay for it. And the world leans on diesel a lot harder than we do.
Thursday's post has S&P Global's numbers on what a full export ban would do.
Why It's 2 Dollars Right Now
The gap averaged 1.04 in 2022, the year Russia launched its full invasion of Ukraine, and 1.17 so far this year. The IEA's September report has Gulf net diesel exports at just over a quarter of their level before this year's fighting, and Russia's product exports near a halt after stepped up Ukrainian attacks on its refineries.
Both times the world ran short, diesel took the worst of it. Trucks, tractors and trains keep running when the price jumps.
What It Means On Location
- At the Sept 21 national price, a 35 gallon fill runs about 72 dollars more in diesel than in regular
- Diesel has averaged 1.33 more this year than over the same weeks of 2025. At that rate a hotshot burning 7,500 gallons a year pays about 10,000 dollars more, and a Class 8 running 100,000 miles at 6.5 miles a gallon about 20,500 more
- Harvest is running now. Dyed diesel skips most of the road tax. It still pays the market
Who's Hiring
Outfits are hiring in North Dakota, Wyoming and Texas, including seats that need no CDL.
The current board is the one to check.
Field Report
Drop your town and what diesel and regular are both running at your pump today.
And if you remember the last year diesel was the cheap one at your station, put the year down.