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Gap Between Diesel, Gas Prices Widening

With gas prices plummeting across North America, it’s been a great start to 2015 for those of us who drive a gas-powered car or truck. But the drop in diesel prices has been far less significant — a fact that has left many people in the trucking industry frustrated.

Diesel_and_gasAccording to last week’s Energy Information Administration price survey, the gap between diesel fuel and gasoline has now reached about 88 cents per gallon. At most fuel stations, gasoline can be found for under $2.50 a gallon — down roughly 87 cents per gallon from this time last year. However, diesel prices have only come down about 59 cents per gallon, with the national average stuck at just under $3.30.

This means most people are saving a lot of money at the pump. But truckers are, relatively speaking, being left out in the cold. At least, that’s how Tom Kruepke, president of Jackson, Wisconsin’s Kruepke Trucking, sees it. “It is costing us more money than it should,” insists Kruepke, whose company boasts a fleet of forty tractor trailers. “This is very unusual.”

Bob Costello, chief economist for the American Trucking Association, says the dip in diesel prices has been nice — but adds that he’d love to see those prices equal the price drops seen in the gasoline market. “While we are very pleased with the drop in diesel, obviously it hasn’t been as much as gasoline in percentage terms,” Costello says.

The good news is that many commercial transportation companies, and particularly the larger firms, have access to significant bulk discounts. Tom Kloza, head of energy analysis at the Oil Price Information Service, says this means many trucking firms are paying less than posted prices for their diesel. “It’s actually much cheaper than you’d think,” Kloza says.

Experts believe the gas-diesel price differential will have the most dramatic impact on sales of diesel passenger vehicles, such as the Volkswagen Golf TDI. As gas prices rose between 2010 and 2014, sales of these vehicles rose about 30 per cent. However, it’s possible the plummeting price of gasoline will help to reverse that trend.

But Kelley Blue Book analyst Karl Brauer says there are other reasons — like better torque — to buy a diesel-powered vehicle. “There are reasons to buy a diesel that have nothing to do with the (fuel) mileage,” Brauer said.