What are the components of the retail price of diesel fuel?

The cost of producing and delivering diesel fuel to customers includes the costs of crude oil, refinery processing, marketing and distribution, and retail station operation. The retail pump price reflects the costs and the profits (and sometimes losses) of the refiners, marketers, distributors, and retail station owners. The relative share of these cost components to the retail price of diesel fuel varies over time and varies among regions of the country.

An illustration of two diesel pumps that you would see at a gasoline station. The pump on the left shows the average retail diesel price from 2005-2014, and is divided into sections showing what we pay for in a gallon of diesel fuel: taxes 15%, distribution & marketing 12%, refining 15%, and crude oil 58%. The pump on the right shows the average retail diesel price for 2014, and is divided into sections showing what we pay for in a gallon of diesel fuel: taxes 13%, distribution & marketing 12%, refining 18%, and crude oil 57%.
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The price at the pump also includes federal, state, and local taxes. In 2015, the federal excise tax for on-highway diesel fuel was 24.40 cents per gallon, and the average of state taxes was 24.90 cents per gallon. There was an additional Leaking Underground Storage Tank fee of 1 cent per gallon. As of July 1, 2015, the average of state and local government taxes and fees was 27.24 cents per gallon. The retail price of diesel fuel also reflects local market conditions and factors such as the location of the fueling station. Some retail outlets are owned and operated by refiners, while others are independent businesses that purchase diesel fuel for resale to the public.

Why are diesel fuel prices higher than gasoline prices?

Before 2004, the average price of diesel fuel was often lower than the average price of regular gasoline. In some winters when the demand for distillate heating oil was high, the price of diesel fuel rose above the gasoline price. Since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline throughout the year for several reasons. Worldwide demand for diesel fuel and other distillate fuel oils steadily increased, with strong demand in China, Europe, and the United States. In the United States, the transition to ultra-low sulfur diesel (ULSD) fuel affected diesel fuel production and distribution costs. Also, the federal excise tax on diesel fuel is 6 cents higher per gallon than the federal excise tax on regular gasoline.

To view recent diesel fuel prices and projections for diesel fuel prices, visit the Gasoline and Diesel Fuel Update and the Short-Term Energy Outlook.