Diesel v.s. regular prices

[fphilli1]

I drive a Diesel SUV and cannot understand why in the state of Michigan the diesel fuel prices are higher than regular when it is cheaper to refine. Diesel fuel is the backbone of the U.S. transportation industry. The high cost of diesel is driving prices high for a large number of consumer goods. I cannot believe that the teamsters union has not boycotted the oil industry to make this right. Diesel is cheaper to refine and should always be cheaper to purchase than regular fuel. I would like some opinions on this please. Am I the only one that feels this way?

[Mr. Pebble]

Frank,

You are missing out on a few points. First, the high cost of diesel fuel reflects higher taxes placed on diesel because the trucks are tearing up the highways and we need to replace them a lot more often than if there were only light vehicles, like cars and pickups.

I believe that the laws have not changed in Michigan but, at least in the past, 49 States restricted the Gross Vehicle Weight of trucks. The exception is Michigan which judges trucks by AXLE weight. That is why you see trucks with wall-to-wall axles hauling steel and other heavy items. Michigan allows more than five times the GVW than anyone else.

Unfortunately, the trucks often sit or travel entirely on one slab at a time and the entire weight of five times over is really tearing up the concrete and asphalt. So we have to go back more often to replace our roads than other States and thus the higher taxes. The trucking companies make out like bandits and the taxpayers go down the drain.

Another thing to watch is weight restrictions. In the Spring, when the thaw comes, the ice melts around the expansion joints in the roadway and the earth below sinks a little creating an airspace and a leverage point. When a heavy vehicle hits the joint, it cracks the concrete and causes a rapid deterioriation in the roadway. But, the roads freeze and thaw irregularly and trucks often ignore the weight restrictions so there is no effective way to stop the cracking.

Of course, even though we have paved roads for 85 years or so, no one has figured out that the same thing happens around the joint in reverse in the Fall. Water seeps into the joints and expands, picking the edge of the concrete up and leaving an air space down the line some but the result is the same. Heavy trucks break up the concrete just the same. It is unlikely anything will be done.

Asphalt is another story. It is much softer and irregular so tires can get traction and stop the vehicle. Unfortunately, water gets into the cracks and freezes at night and breaks up the asphalt. It becomes more pronounced when heavy vehicles run over it at the same time. This is what causes all of those horrible potholes in the Spring as when the cracks go deeper, so does the water that freezes right down to the concrete or dirt, whichever comes first.

Now, take the road builders. Just about every State gets flooded with complaints in the papers about the potholes and how each State has the worst roads in the country. Most of these letters are generated by the road builders and their friends to soften up the public and shake some loose change from our poclets. Many projects are horrible wastes of money. The State of Michigan spent $13 million building four bridges over nothing in the City of St. Johns. They were pouring concrete as the railroad track of the abandoned former Grand Trunk RR was being torn up (picture available). The five year plan for the State listed other locations where bridges were being replaced over railroad ROW (abandoned).

We don't even want to bring up the Ohio Turnpike which, in the 1980's, replaced all of its two lane bridges with new two lane bridges even though there was wall-to-wall traffic from one end to the other. As a frequent traveler in my van on business, all I could ever see in the rear view mirror was the grille of an 18-wheeler. Let's face it, they build obsolesence into our highways so they can keep going back again and again while they siphon our tax money.

I hope this is an adequate explanation for you. As you can see, I have a lot of time to kill.

Mr.Pebble

P.S. I acquired the name Mr. Pebble when the State of Michigan wanted to put up a railroad crossing gate in the City of Leslie. It had been taken out earlier, many years ago. I pointed out that there were only two trains per day going through town, one near midnight, the line was up for abandonment and we shouldn't squander the money. The Mayor replied that if the money was not wasted in Leslie, the State would take it to Detroit and waste it there. A Councilmember then added "Why fight it? It's like throwing a pebble in the lake. It makes a little splash but goes away quickly." I replied "Well, call me Mr. Pebble then." It has been the hallmark of my activism since then.

[mchastek]

Wow - EXCELLENT post - very thorough and intelligent!

I really enjoyed reading your explanation. You learn something new every day!

Great nickname!!

[fphilli1]

Mr. Pebble,
Thanks for the information. I now understand a little of the diesel cost. However I feel the road tax should be handled by the licensing of the trucks and trailers and leave the fuel cost as just that. The same with the private cars and suv's. All the costs required for the maintanence of the roads should be handled in the license plates. There are too many opportunities for the government to hide costs in the price of a gallon of fuel. By the way some of the states that have diesel lower than regular are our cold wheather neighbors Ohio and Indiana. I think Michigan is price gouging the diesel. What do you think?Frank,

You are missing out on a few points. First, the high cost of diesel fuel reflects higher taxes placed on diesel because the trucks are tearing up the highways and we need to replace them a lot more often than if there were only light vehicles, like cars and pickups.

I believe that the laws have not changed in Michigan but, at least in the past, 49 States restricted the Gross Vehicle Weight of trucks. The exception is Michigan which judges trucks by AXLE weight. That is why you see trucks with wall-to-wall axles hauling steel and other heavy items. Michigan allows more than five times the GVW than anyone else.

Unfortunately, the trucks often sit or travel entirely on one slab at a time and the entire weight of five times over is really tearing up the concrete and asphalt. So we have to go back more often to replace our roads than other States and thus the higher taxes. The trucking companies make out like bandits and the taxpayers go down the drain.

Another thing to watch is weight restrictions. In the Spring, when the thaw comes, the ice melts around the expansion joints in the roadway and the earth below sinks a little creating an airspace and a leverage point. When a heavy vehicle hits the joint, it cracks the concrete and causes a rapid deterioriation in the roadway. But, the roads freeze and thaw irregularly and trucks often ignore the weight restrictions so there is no effective way to stop the cracking.

Of course, even though we have paved roads for 85 years or so, no one has figured out that the same thing happens around the joint in reverse in the Fall. Water seeps into the joints and expands, picking the edge of the concrete up and leaving an air space down the line some but the result is the same. Heavy trucks break up the concrete just the same. It is unlikely anything will be done.

Asphalt is another story. It is much softer and irregular so tires can get traction and stop the vehicle. Unfortunately, water gets into the cracks and freezes at night and breaks up the asphalt. It becomes more pronounced when heavy vehicles run over it at the same time. This is what causes all of those horrible potholes in the Spring as when the cracks go deeper, so does the water that freezes right down to the concrete or dirt, whichever comes first.

Now, take the road builders. Just about every State gets flooded with complaints in the papers about the potholes and how each State has the worst roads in the country. Most of these letters are generated by the road builders and their friends to soften up the public and shake some loose change from our poclets. Many projects are horrible wastes of money. The State of Michigan spent $13 million building four bridges over nothing in the City of St. Johns. They were pouring concrete as the railroad track of the abandoned former Grand Trunk RR was being torn up (picture available). The five year plan for the State listed other locations where bridges were being replaced over railroad ROW (abandoned).

We don't even want to bring up the Ohio Turnpike which, in the 1980's, replaced all of its two lane bridges with new two lane bridges even though there was wall-to-wall traffic from one end to the other. As a frequent traveler in my van on business, all I could ever see in the rear view mirror was the grille of an 18-wheeler. Let's face it, they build obsolesence into our highways so they can keep going back again and again while they siphon our tax money.

I hope this is an adequate explanation for you. As you can see, I have a lot of time to kill.

Mr.Pebble

P.S. I acquired the name Mr. Pebble when the State of Michigan wanted to put up a railroad crossing gate in the City of Leslie. It had been taken out earlier, many years ago. I pointed out that there were only two trains per day going through town, one near midnight, the line was up for abandonment and we shouldn't squander the money. The Mayor replied that if the money was not wasted in Leslie, the State would take it to Detroit and waste it there. A Councilmember then added "Why fight it? It's like throwing a pebble in the lake. It makes a little splash but goes away quickly." I replied "Well, call me Mr. Pebble then." It has been the hallmark of my activism since then.

[Mr. Pebble]

Frank,

I never met someone who did not think that other people should pay more taxes. Look at all of the self-righteous non-smokers who cheer at the cigarette tax placed on smokers. It's just a way to rip off another group and be smug about it.

Look at it this way. The Feds and each State have to pay the bills and the only way is by taxes and fees. The other States may have lower gas taxes but higher sales or income taxes. Maybe they have less services. One thing for sure, more money means we get more from government, less money means less services.

We set ourselves up for a big problem in the 1950's when Eisenhower promoted the Interstate Highway System as a "National Defense Highway System." It was really a quick way to grow our economy with better roads which is what we needed. We did, however, shoot ourselves in the foot somewhat. The Feds built the Interstate System and then gave it over to the States, as built, to maintain from then on. Being new, and having a lifespan of 25 years, the maintenance was low and no one had the vision to plan ahead.

Look at what happened. There are very few Interstates that are under 25 years old and they need a lot of maintenance. We made no provision for this and are paying the price in deferred maintenance and bad roads. It would have been a lot better if we had put a sinking fund tax on gasoline in the 1950's that would have put away money for repair and eventual replacement. Of course, like Social Security, some government agency would have borrowed the money and it would be gone anyway.

Another thing to look at is Social Security. The money has gone into a fund but the government can't do anything with it. They found out they could just take the money with IOU's and never have to pay it back. It is just like another tax but on future generations except, with reduced benefits. It will never have to be paid back. The secret plan of the Bush Administration in revamping SS is to give his Corporate sponsors a huge tax break in dropping the employers contribution to SS, saving Billions of Dollars for Corporate America and reducing SS payments to individuals to around $100 per month.

I did a spreadsheet which shows that if the government had invested ALL of my SS inputs since I began paying in in the 1950"s, I would be able to draw $70,000 per year if I lived to be 88 years old. Incredibly, the government spends all of our SS money in their general funds and doesn't count it as deficit spending!!

Why bring up SS? The solution is simple. Make the Feds keep their hands off the SS money and let it earn interest by doing the only thing they could legally spend the money on. That is, lend it to States and Cities who are now borrowing from the private sector at a higher rate. This would give us a wealth of money to repair out local government infrastructure and and fix our roads. Cheaper for the States and Cities, cheaper for the taxpayers, better for SS and the scoundrels in Washington would not be able to squander our retirement money.

Also keep in mind that few people watch where their money is going and a lot of tax dollars are horribly wasted but no one realizes that we have to keep a sharp eye on our government. I saw a bumper sticker recently that said: "Democracy doesn't come cheap. You have to be rich to get one." As a long-time political activist and former candidate for City of Lansing, Michigan Mayor, I can show you waste that will roll the hair up the back of your neck. If that money had not been squandered, we could have lots to fix out roads. And keep in mind, the crooks have come up with a neat plan to pack our legislatures with their friends. They win in the primaries. They put up two candidates and spend a ton of money placing them in the top two. The election is now over as they win either way and you can kiss your tax dollars good-bye.

My plan to save GM addressed health care costs by suggesting that it was not the premiums that were the problem but runaway costs. A pair of socks for $54, paid for by my health care plan is an example. For our taxes, it is not the amount of taxes but what we get for our money. I have been trying to attach a photo of US 27 in St. Johns, Michigan where the State spent $13 million building four bridges over nothing. If you can see the photo, the rails have just been pulled up and the bridges are nearly complete. A terrible waste of money but unless we keep a sharp eye on these costs, we will never have enough money to fix our roads and your gas taxes will keep rising. It is not our dumb-cluck government but the dumb-cluck taxpayers who are the problem. When we crawl out from under our tables, shake a fist, do our homework and then vote, both the Democrats and Republicans will clean up their act or they will be out on their fat butts spending the fat pensions they voted themselves.

Mr. Pebble

[fphilli1]

Mr. Pebble,
All I was trying to get at is if the big trucks are causing the high road repairs then let them pay for it in plate taxes. If you want to look a very viable solution to a great deal of our countries transportation issues please take a look at the web page for a project I am on the adivsory board for. The company is the Interstate Traveler LLC. The web page is http://www.interstatetraveler.us/ This is a Maglev solar transportation system that generates hydrogen. Take a good look at the entire web page and illustrations. Let me know what you think. By the way the system also generates fresh water.......

[Mr. Pebble]

Frank,


Charging more for truckers plates and lowering it for diesel consumers would still be robbing Peter to save Paul. Look in the history books. The U.S. has strict Maritime Laws so everyone registers their ships in Panama where the laws are very lax. We lose a lot of control and a ton of tax money as a result. Most corporations, including GM, are registered in Delaware because they have the most lenient corporate laws. Delaware collects a ton of tax money and every other state loses out.

Take Natural Gas. Save the momentary spikes, the price of natural Gas on the Commodities Markets never rose above one dollar per MMBTU's. That was until the year 2000. Over two years ago, I heard a comment on CNBC that, for the first time, consumption of NG exceeded recovery. I immediately told people to invest in NG related companies and months later it peaked at $5 per MMBTU's. Earlier this year it had passed $14 and now we can expect huge increases in the cost of heating our homes this winter.

What happened? Besides the normal increase in consumption, power companies found it was cheaper to convert from coal to NG to meet emissions requirements as opposed to purchasing expensive to buy and maintain pollution control equipment. With a power plant consuming more NG than the entire community that it serves, there was a quantum leap in consumption. Now the shortages are critical and the costs, passed on to consumers, far exceed the cost of pollution control equipment for those plants. This is another example of "Crate and Shift" thinking.

But wait! It gets worse. Because we can not pump enough NG to meet our needs, we will have to start importing it in the form of Liquefied Natural Gas. This is catastrophic in two ways. One, LNG is so explosively dangerous that on the Gulf Coast, the ships will be unloaded 26 miles offshore, as close as they can safely come. It is going to be a lot worse on the West Coast where the waters are not so shallow and the ships will be dangerously close to shore when the unload. The other way is that we will be importing a huge amount of LNG which will greatly increase our trade deficit. It is just a matter of time before foreign countries get sick and tired of financing American excesses and cut us off. Our inability to import oil, LNG, machine tools and consumer goods is going to cause a catastrophic inflation rate and bring us dangerously close to Soylent Green.

Now look at charging trucks more for license plates. As noted above, look at the license plates on most OTR trucks. Most are registered in Maine and Texas where trucking laws and fees are more lenient. Michigan and other states get nothing and the only way to pay for the roads is the fuel tax. If we reduce axle weight or raise the fees for trucks, it will increase costs and that will be passed on in the form of higher shipping charges which will be passed on to the end user (that's you) who ultimately must pay all costs. Just like heating your home, you will pay one way or the other but some ways are much cheaper. Also trucks will fill up in Indiana and Ohio and pay no tax at all. A few states (I believe Arkansas is one) require truckers to buy fuel within the state before leaving and State Police prowl the state line to check up on vehicles leaving the state. Just about any truck can get from Toledo or South Bend to Saginaw or Muskegon or below where most freight goes and return without filling up and therefore pay no taxes at all to Michigan.

So, the question is, just how bad do we want to punish ourselves by coming up with ever more creative ways to "Crate and Shift." And besides, passenger diesel owners need a kick, too and, like the cigarette tax, those who have gasoline powered cars would rather stick it to you than pay themselves. Are you a non-smoker that loves to see that tax on cigarettes? If you are, don't get mad when you are it and others cheer the thought of sticking it to you.

I can show you just as much waste in government than at GM and Ford. That's where the problem is. Think about is as you go down the highway, saving fuel and blowing soot into the air as diesels do. I have bad habits, too, but when the brain-dead liberals get into my face about wasting resources, I whip out my American Flag, wave it in their faces and reserve my American right to lavish in conspicuous misconsumption without conscience.

By the way, as an economist and engineer, my solution to resource conservation is to start taxing resources when they come out of the ground or are cut down. A dollar per board foot or $50 per barrel would have us all conserving like crazy and make recycling so profitable that we wouldn't have to use tax money to stop us from borrowing against our grandchildren's future. It's a great idea but try selling it to a narrow-minded and arrogant rich Republican or a brain dead liberal who couldn't hold a job if the taxpayers weren't willing to ante up.

Take that, all of you. Isn't Democracy wonderful!!!!

I am going to start this as a new thread in a conservation mode.

Have a nice day.

Mr. Pebble

[fphilli1]

I drive a Diesel SUV and cannot understand why in the state of Michigan the diesel fuel prices are higher than regular when it is cheaper to refine. Diesel fuel is the backbone of the U.S. transportation industry. The high cost of diesel is driving prices high for a large number of consumer goods. I cannot believe that the teamsters union has not boycotted the oil industry to make this right. Diesel is cheaper to refine and should always be cheaper to purchase than regular fuel. I would like some opinions on this please. Am I the only one that feels this way?

To all,
I will not get off this. I guess we can say we agree we disagree. There is not good explination of why diesel costs more that regular when it takes far less cost to refine it. How long do you think it will take for all consumer goods to go up 10% when the average cost of a gallon of diesel is over $3.00 per. I do not understand why the oil industry does not go after the alternative process to produce diesel fuel. There is a company in California that has developed an aditive that you can add to used vegatable oil and produce diesel fuel for $.50 per gallon. All the industry wants to do is continue down the same old path and gouge the American people for more of there hard earned money for less. When are we going to learn we the people should run the country not the oil industry and pork barrel politions.

[Mr. Pebble]

Frank,

Anything can look good if you cherry pick your reasons. As far as diesel fuel, and I used to own a diesel-powered Oldsmobile 88, you have to take the full picture into account.

First of all, the cost of refining diesel is within a penny per gallon of other fuels and there is simply not any big savings. Second, just about every state taxes diesel at a different rate than regular unleaded and Michigan has one of the highest taxes on diesel in the nation, far exceeding the tax on gasoline. Third, sending tankerloads to trucking companies and truck stops can be efficient, sending a dedicated truck around to unload in small quantities in widespread locations really drives up the cost. Even selling in small quantities at the truckstop is not efficient. Fourth, it costs a lot of money to put in an extra tank and delivery system at a gas station just to sit around idle 99% of the time. The station has to get back that money somehow and subsidizing individual consumers is not fair to us regular unleaded consumers. And last, maybe the California company has a great product that pays for itself only if sweat equity is discounted but going after used oil would amount to virtually nothing against total production and consumption. Large refineries, the only kind we have now, must run in the hundreds of millions of gallons mode to produce efficiently and going after tiny, tiny little things just can't be done.

Let's face it, if Americans want to pay $10 per gallon of unleaded, dieel owners can get a 10 cent per gallon discount. Works for a few but not in the real world. Frank, you have to start looking at the big picture and counting all of the aspects, including human frailty when making judgments. There are a lot of things I don't like so passionately that I am starting up an internet TV program to put up my soap box. The issues are monumental compared to yours but I look at ALL of the information before taking a stand and let me assure you that sometimes it is very painful. I am a seasoned political candidate (Mayor of Lansing, Michigan) and can assure you that pushing the ocean with a broom is no sweet chore.

May I suggest you get off your little horse, pay your gas taxes and go for some of the big issues and I can give you a few whoppers, if you would like.

Mr. Pebble

[bbalkid3]

Mr. Pebble,

You sound like you know what you are talking about. I'm doing a report for a class right now about diesel prices and why they're staying high while normal gas prices are slowly dropping. I read your last entry and if I understood it right, you said it was because we had to pay for the extra pumps that were installed and to pay for the extra trips made by the fueling trucks. What I was wondering is: why are the prices so high now? Weren't the long trips and extra pumps there three years ago? Why are we paying for them now and not then? Maybe I just misunderstood what you previously wrote and sorry for wasting your time if I did but it really helped me out so I just had to ask these questions.

[Mr. Pebble]

You have the right idea. It's just that Diesel is made by the same fractional distillation process that regular gasoline and avgas is. It just comes out at a slightly lower temperature, that's all. The higher prices compared to three years ago reflects higher crude oil prices and higher taxes.

Take note. State governments usually tie increases in the gasoline tax when the market price is coming down like it is now. SInce the price is coming down, few complain about the price, never realizing that when the market reaches equilibrium, that price is the amount of the tax higher than it would have been without the tax. Those politicians know how to work the taxing system.

Interestingly, the City of East lansing, Michigan has a street called Saginaw Street. Many years ago, the speed limit was 50 MPH and that was fast. Then, four Michigan State University students were killed in a firery crash when the driver made a left turn in his Volkswagen Beetle in front of a truck. It was such a bad crash that they lowered the speed to 35 MPH for the last 30 years or so. That speed was too slow and everyone routinely drove 45-50 MPH. As tax money dried up, the police were out there continuously writing tickets and filling the city coffers. Last year, the State ordered the City to change the speed to 45 MPH as it was a State Highway. When they did, the judges doubled the fines because the city was losing the revenue. The State caved in and the limit is back to 35 MPH and the smart ones slow down and the others provide the City of East lansing with their windfall. I have had a P.O. Box in East lansing for 45 years and can assure you that the East Lansing Police are not the brightest bulbs in the Universe but they are a lot more competent that the judges in court.

Also note in Michigan that the truckers pay a lot less fuel tax than non-commercial vehicles which discourage the purchase of diesel powered vehicles.

Mr. Pebble

[fphilli1]

To all,
I noticed in your last reply to me Mr Pebble that you insistied that the reason diesel is more costly in Michigan was to pay for the road wear of the big rigs. I went to Indiana, Illinois, and Ohio last weekend and noticed that in our neighboring states they have a tax exemption for the big rigs so they get the diesel at a cheaper rate than non commercial users do. They also have the same type of traffic and pot holes ect. that we do in Michigan. I still do not understand why in the summer in Michigan the deisel is cheaper than regular and in the winter it is more expensive? I still cannot swallow your answer as being reasonalble. I think the oil companies are just ripping us off as they see fit. All the fuel prices went up over $.50 per gallon in just weeks due to the refineries in the Gulf coast. Our reserves have never been as high as they are now. You cannot explain why the sudden cost explosion other than price gouging. I am a firm believer in democracy and capitolism. I know that the price of capitolism is what ever the traffic will bear is the rule. However I do not believe in lthe oil industry ripping the American economy off when we have more reserve now than we ever did. The reserve is for rainy days. Well it is pouring outside and we still have not used any. We just keep paying more for the barrel.

[razorback]

Mr. Pebble sounds like he works for "big oil". Many of his arguments are spurious at best. Simply put, yes, we are being ripped off. Diesel is much cheaper to refine than reg.

Gallon for gallon, diesel contains about 40% more energy than reg. gas. That means the oil companies make 40% less money on diesel. Unless they artificially inflate the diesel price by 40%. Everything else they tell you is just BS.

[fphilli1]

Razoback,
Finally someone with some common sense. All the rest of the back up retoric is just that. We pay way too many taxes in Michigan including tax on fuel. Go to Ohio, Indiana, Tennessee, and further south and you find the same amount of people per square mile and lower taxes all the way around. The old Democrats that have been running Michigan have done that and now we have 4 more years to get blown away with more taxes and less service. People and buinesses are running from Michigan beacuse it is one of the most expensive states in the union to live in. All because of taxes. Diesel is just one example. Thanks for you post. I was beginning to think I was alone in my thought process.

[razorback]

Yes, it is always nice to have some company. You have to be careful on these message boards. You never know who you are talking to. I have no axes to grind and I don't make my living in the oil business. Anyone should be able to see why diesel costs more. It contains more energy and the oil companies want you to pay for it even though it costs them less. Ridiculous, yes, but true.

[wallis]

Diesel fumes are responsible for ashma in small children, and people with lung problems. If you don't care about other peoples health and their health coosts, run your tailpipe into your cabin and enjoy.

[wallis]

Number 1. you obviously aren't very smart for being suckered into buying an SUV. Look at the damage all the gas guzzler are doing to America's reputation around the world, gas prices(ever heard of supply and demand), are through the roof. There are dangerous( duh...they roll over), Poor visibility, more expensive wrecks, more deaths, higher insurance costs, to pay for the dumb-ass's fool hardy distorted egos.
Number 2, Diesel engines are used to make long haul trucks more efficient, durable, and reliable. Also construction vehicles use diesel because of it's better torque. Not for dumb ass's too drive around, smell up your neighborhoods, attack children with asthma, and look generally stupid and clunky. Hardly a vehicle that emulates class or intelligence.
Number 3. Get a real classy car, sell the SUV, and have more friends, and respect, and support your country and neighborhoods.
Number 4. Wake up, stupidity, is not American, nor cool dude.

[mchastek]

Wow, getting rid of an SUV means getting more friends? If your friends all have SUVs, maybe you'll lose them! Funny post wallis.. I can understand where you're coming from.

For the record, I don't own an SUV :P