Diesel V.S. Gasoline
In order to better understand gasoline and diesel market, it seems important to understand the difference between both. Diesel and gasoline come from the same source which is crude oil but the refining methods vary.
Gasoline, also called petrol is a fuel used for private vehicle and small aircraft.Diesel also called gas oil is used as home heating fuel in some western European countries but also for agricultural machinery, cars, lorries, and others road transports. In principle, diesel fuel is easier to refine than gasoline.
The major difference between the two is found in their consistency and the type of engine using it. Diesel fuel is refined to a thicker and more oily consistency, while gasoline is refined to a lighter consistency. Gasoline is also more flammable than diesel and requires less heat for combustion. Diesel engine are generally more fuel efficient because diesel is thicker than gasoline. Diesel combustion emits less carbon dioxide and carbon monoxide than gasoline combustion, but it also emits more particulate matter. Diesel engine is more popular in Europe than in the US.
At first Diesel fuel was less costly to refine than gasoline, but since 2006 and 2010, the introduction of ultra-low sulfur diesel has increased diesel production costs as it requires more refining. In average gasoline is more expensive than diesel in most countries. Many countries tax diesel and gasoline differently. For instance, the US tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel. In contrast most European countries have lower taxes on diesel than on gasoline. Since taxes are one of the most important factors determining the final consumer prices of fuels.
The spread between diesel and gasoline prices also varies over time with the different factors such as:
Supply, demand and seasonality..
We took this graph to illustrate the correlation between Gasoline, Diesel and Crude oil, indeed, the price of the Crude oil will have a direct impact on the Gasoline and Diesel. Moreover, this shows perfectly the volatility of these commodities.
When we look closely to gasoline, we can see that the graphs illustrate a seasonal pattern, gasoline tend to rise starting in the spring and tend to decline on the late summer and fall. This reflects the beginning of summer-grade gasoline, which is more expensive to manufacture due to its more exigent production process, in February and March.
Now, regarding the actual price of the gasoline, we can see the increase of the price per gallon due to the seasonal pattern explain above. The decreasing curve in February is also due to large gasoline inventories (high refinery runs driven by increased distillate demand in general) combined with lower demand for gasoline.
Big Oil
The seven largest publicly traded oil & gas companies are known as “Big Oil”. These include BP, Chevron Corporation, ExxonMobil, Royal Dutch Shell, Total, Eni and Conoco Phillips.These corporation, for the most part, include two or more firms in their group, for the exception of Royal Dutch Shell operating with only Shell, as it can be seen in the graph below.
This term include the dominating corporations that have a high influence in the market and setting prices. However, it does not include national producers and OPEC oil companies which often have a greater effect and influence on the price.
http://www.factfish.com/statistic/gas%20diesel%20oils%2C%20total%20production
https://www.eia.gov/dnav/pet/pet_pri_gnd_a_epd2d_pte_dpgal_w.htm