Re: Diesel truck prices bottoming out?


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Posted by David Sherman on Thursday, May 22, 2008 at 11:32:44 :

In Reply to: Re: Diesel truck prices bottoming out? posted by MoparNorm on Thursday, May 22, 2008 at 10:47:52 :

I expect we'll soon get to where diesel and gasoline are the same price per bhp-hr, since that represents the actual value of the fuel to the customer. Right now, refineries are set up to make mostly gasoline. It used to be that they made all the gasoline they could, and diesel was just one of the leftovers. Now they make all the diesel they can, and it's the gas that doesn't have such a ready market. Maybe eventually they'll re-tool to make primarily diesel, and the prices of the two fuels will get closer, but strictly in terms of market economics, what the customers really care about, whether they know it or not, is cost per bhp-hr or ton-mile. Another factor to consider is that of all the equipment currently burning diesel, only with cars and light trucks do owners have a choice between gas and diesel. Even if diesel was 10 times the price of gas, it would have to stay that way for a very long time before construction equipment, heavy trucks, and locomotives would switch to gas. Manufacturer's aren't going to design big new spark-ignition engines, and operators aren't going to scrap $50,000 engines out of their existing machines just to save money on fuel unless the savings look to be large and permanent.



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