What Factors Are Causing Diesel Fuel To Rise?

gas pump

It’s no secret many companies and consumers are still struggling in this post-pandemic culture. As the rising costs of supplies cause everyone to tighten their belts, companies are also concerned about the rising cost of fuel. While fleet owners and drivers aren’t sure how to interpret all the details, experts offer some information to help us understand what’s happening with fuel costs. 

What Is Happening With Diesel Fuel?

The rising costs of goods and products around the country are the number one contributing factor to many economic struggles. The rising costs of diesel fuel are no exception. Manufacturers use crude oil to make diesel, and as the price of crude oil rises, so does the price of diesel. In the past several months, there has been an approximate 15 cent increase per gallon for diesel fuel. There are many petroleum refineries here in the United States that use crude oil to manufacture diesel and distribute it. Prior to 2006, most of the fuel contained a lot of sulfur until the Environmental Protection Agency deemed it hazardous. Now, there is less sulfur because most manufacturers use soybeans and corn to make the fuel. 

What Factors Are Causing Diesel Fuel to Rise?

One of the biggest factors causing the rising prices of fuel is the rising cost of corn and soybeans. As the cost of these products rise, it drives up the Renewable Volume Obligation (RVO), which refers to a refiner’s monetary obligation. As stated in the Renewable Fuel Standard put forth in 2005 by the Energy Policy Act, the United States must fulfill a certain amount of transportation fuel each year. RVO includes a refiner’s fuel obligation of sales multiplied by the annual fuel percentage. Since the increase of government regulations and mandates, many fuel companies and refiners are seeing a rise in RVO. The combination of these mandates and the rising costs of fuel supplies are driving the RVO, leaving the diesel market to seek alternative sources of fuel. 

Another issue with the rising fuel cost is that companies in the fuel market must show they are using a certain amount of fuel products. However, as the costs rise, many companies consider making jet fuel over diesel. This leaves oil trading companies at a standstill as they navigate the rising costs. An increase in agricultural costs continues to push the RVO higher, and experts believe the Renewable Fuel Standard is contributing to the issue. 

RVO numbers not only affect fuel imports, they also affect exports. In a market still disturbed by the pandemic, diesel exports are still below average. The market is deciding between jet fuel and diesel fuel, since there are no regulations like the Renewable Fuel Standard on jet fuel. Currently, experts notice an increase in jet fuel, but they believe this is because more people are traveling by air. However, it still impacts diesel costs. 

How Will the Rising Costs Affect Other Companies?

The question remains whether the rising costs of diesel will affect other companies. Some companies wonder if they will need to close their doors if the price doesn’t drop soon. Certain freight shipping companies that use diesel may find themselves struggling to keep up with production. While this may affect smaller companies, other businesses that depend on freight shipping will feel the impact as they find alternative shipping options. 

Trifecta Transport Can Help

There are many that use shipping options for their business. If you own a business that relies on shipping companies to deliver your products, it can feel stressful when you’re waiting for your products to arrive. Trifecta Transport specializes in all-in-one customer solutions that help you navigate shipping logistics for your business. Our team experts help educate customers on a variety of shipping options, so they can make the best decision for their business needs. 

Contact Our Team Today

If you’d like more information on our services and how we can help you navigate shipping logistics, contact us today. We can give you a quote on our services and give you more information on how we can help.