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March 31, 2008

The price of diesel fuel

Fuel prices have been rising across the board, but one price in particular has sparked special notice. This is the price of diesel fuel, which seems to be skyrocketing. What's going on, and why should I care if I don't drive a diesel-fueled vehicle? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"Two good questions. First of all, what's going on? Of course, diesel fuel is rising, in part, because oil prices have gone up. Diesel fuel is made from oil, so as oil prices have gotten more expensive recently, you would expect to find that diesel fuel as well as regular gasoline will have gone up in price. But there are also some special things going on with diesel fuel. One is that there were some new environmental rules imposed on diesel fuel in 2006, and that's still working its way through the system and resulting in higher diesel prices. Secondly, as the world economy has grown, more products are being moved around the world, including in our country, by diesel-powered trucks. And so the demand for diesel fuel is up. That's also caused the price to increase. Now, your question about whether you should care if you don't drive a diesel-fueled vehicle. Well, you should care because many of the things that we buy in stores have gotten there by being moved by a diesel-powered vehicle. So if there are higher diesel fuel prices, those eventually are going to be passed on to consumers at least in part in terms of higher prices for many of the products we buy."

Posted by Dave at March 31, 2008 08:00 AM