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Diesel stays stubbornly high amid crude oil drop

Once-cheap fuel now costs much more than gasoline, users getting little relief at pumps
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Motorists who fill up with diesel haven't benefitted as much from falling fuel prices.

Pity the poor diesel truck owner.

While regular gasoline prices have dropped significantly with the plunging price of oil, the pump price for diesel has remained stubbornly high.

Diesel is now averaging $1.38 per litre in Metro Vancouver, down just eight per cent from its summer peak, while gas has fallen 25 per cent to $1.15.

"It shouldn't be that high," said John Whittall, a West Kelowna photographer and retiree who bought his diesel pickup for the fuel savings.

"Typically, diesel hasn't been more than gas. When gas was low it was lower."

That's historically true.

But early 2009 – when diesel was 85 cents a litre and gas was nearly $1 – is the last time diesel drivers enjoyed big savings.

The price gap closed and since 2012 diesel has cost a few cents a litre more than gas most of the time, according to statistics maintained by petroleum industry analysts MJ Ervin and Associates.

For the last three years, diesel has been stuck between $1.30 and $1.50 in Vancouver, costing a few cents more than regular gas for most of that time.

RELATED: Gasoline price drop nearly done for B.C. motorists: analyst

Jason Parent, vice-president of consulting at MJ Ervin, says the reason for the disparity is diesel and gasoline are two very different commodities that don't move together in lockstep.

"They each have their own supply and demand fundamentals and they can move in different directions," he said.

Unlike gasoline, which jumps in price towards summer as more drivers hit the road, diesel tends to rise in the winter.

The reason, Parent said, is that diesel is virtually identical to heating oil, which is in high demand to heat homes in the winter.

"In the winter season when it gets colder, demand for heating oil spikes and that causes a demand pull on both heating oil prices and diesel prices."

The drop in crude oil prices has put downward pressure on diesel, he said, but that has been largely offset by the increase in winter demand – much to the irritation of diesel users.

"The guys who use diesel are all wondering why they're not seeing the same benefit as everyone else."

Whittall said he has difficulty believing Parent's explanation.

He said diesel prices never seem to budge, no matter if it's summer, winter or crude oil prices are collapsing.

"I bet you it hasn't moved a penny up here," he said.