Minnesota Farmer


Divergence
November 21, 2011, 2:05 pm
Filed under: Biofuels, cars, ethanol, Farm, food, travel | Tags: , , , , , , ,

To most people the current decline in fuel prices is a relief, but to those who use diesel fuel to move, the news has not been so good.  Why should you care?

I admit, I have been relieved to see gasoline prices drop, but I have been perplexed that for quite a few months now the price of diesel fuel has not gone down, indeed it has gone up.  When I recently filled my gas tank near Chaska for $3.13 I was quite pleased, since that was down a lot from the $3.27 that I had seen on the pumps when I left home.  What did not please me was to realize that diesel prices had again gone up and were now at $4.17.  Only a year ago the two fuels were at nearly the same price.  That increase in diesel fuel prices verses gasoline prices affects everyone.

There is very little in our life here in the U.S. that is not dependent on the price of diesel fuel.  The trucks that bring all of the things we need and want are powered by diesel.  Buses and trains, ships and tractors all are dependent on diesel fuel.  More than any other fuel source, diesel is the power that moves us.  The food you eat, the clothing you wear, the car you drive, the fuel that moves our machinery, all arrive at the store on the power of diesel fuel.

Our nation’s farmers depend on diesel fuel as a powerful, economical, source of power for their machinery.  Without diesel fuel there would be no ground preparation, no planting, no fertilizing, no weeding, no harvesting.  Food moves from the farm to the store on diesel powered wheels.  It is a large part of the price we pay for everything we eat.

For most of my life I have seen diesel fuel as the lower priced, higher powered, source of energy for transportation.  It has become the fuel of choice for many in the rest of the world.  But unlike gasoline, the demand for diesel fuel is inelastic.  The demand for diesel is always there.

Consumers look at the price of gas as too high and they stop traveling, trips are cancelled or consolidated, more efficient cars are purchased and the big, gas guzzling vehicles are mothballed.  Diesel fuel use does not change so easily, the trucks that move everything we need must keep going.  The buses and trains we use when gas prices are high are filled to the brim, and new routes are put into use.

Then there is the new competition for gasoline, ethanol.  Whenever gas prices get too high, gas wholesalers add more ethanol to the mix.  The current price of ethanol to gasoline is such that adding a little more ethanol to the mix can increase profits for gasoline sales, diesel fuel has no such lower priced alternative.

Usually when fuel prices go down the price of many of the goods we buy goes down also, but this time I wouldn’t look for decreasing prices at the grocery store.  Because of the rising prices at the pump for diesel fuel, I expect the price of many of our goods to continue to go up.  That will take an ever increasing amount of money out of the pockets of all of us.  Not at all a comforting thought.

Michael

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2 Comments so far
Leave a comment

how come an ethanol diesel mix can’t be concocted?

Comment by dab

It has been, but is not really economical right now.

Comment by Michael




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