Why is Diesel More Expensive Than Petrol?

Why is diesel more expensive than petrol?

Diesel vehicles have greater fuel efficiency and better miles per gallon than petrol equivalents – particularly over longer distances. However, despite this fuel efficiency, diesel is still more expensive than petrol. Why is this?

Import prices

Aside from the market cost of crude oil itself, another factor that impacts that fuel’s overall cost is its import and delivery prices.

Without diving deep into chemistry, diesel has larger molecules than petrol. As such, it’s heavier, which means it’s more expensive to import and deliver to fuel stations nationwide. This reflects in the cost of diesel itself.

What’s more, domestic refineries of diesel have often struggled to meet the demand of diesel drivers. As a result, the UK has to import more diesel from other countries. This drives up the fuel’s prices (as well as its import and transportation costs), which retailers pass onto customers to cover.

A complex refinement process

Diesel requires a number of complex additives for its refinement process. These are expensive, which pushes the price of the fuel up.

Scarcity and reduced production

In April 2023, the Organisation of Petroleum Exporting Countries (OPEC) announced cuts to their oil production. This was positioned as a move to support market stability. This reduction in global oil supply had the knock-on effect of raising the price of existing fuel resources, including diesel and petrol.

Variation in seasonal fuel demand

At the end of the summer ‘driving season’, retailers often find themselves with a surplus of petrol, which frequently can’t be exported. Retailers will therefore drop the price of the petrol, further widening the disparity in cost between diesel and petrol.

Why are diesel cars more expensive than petrol?

Besides the diesel itself costing more than petrol, diesel cars are also more expensive to run than their petrol equivalents.

In 2018, the UK government introduced a ‘diesel tax’ designed to target air pollution. Diesel cars are more polluting than petrol models – they release four times more nitrogen dioxide, and 22 times more particulate matter. This tax was introduced to disincentivise drivers from choosing diesel vehicles.

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