Remember when you were a kid and diesel was always 25-50 cents per gallon cheaper than regular gas?  Not these days.  Those roles are now reversed and diesel is consistently higher per gallon than gas.  Why the big change?  While seasonality has always affected the price of diesel, around 2004 the market shifted and diesel prices overtook gas prices for the long term. 

Higher diesel prices are a problem for transportation because they limit economic growth.  One of the biggest reasons for this is the strong demand for diesel fuel in developing countries.  While in the United States about 98% of our passenger vehicles consume gasoline, that is not the case for other parts of the world.  The majority of new passenger vehicles in Europe are diesel powered.  Add that to the large increase in heavy machinery being used in fast growing countries like India and China and you have a significant increase in the demand for diesel.  At the same time, demand for this kind of fuel has outpaced regular gas here in the US.  Demand for regular gas peaked in 2007, while diesel has remained strong.  As stated in an article titled Why Diesel Costs More Than Gasoline on the NACS (National Association of Convenience Stores) website, "US clean diesel vehicle sales increased 25.6% in 2012, almost double the overall auto marker's increase.  Comparably demand for on-road diesel fuel has increased 11.8%."  This demand can only be met with refining capacity.  The US refining capacity is, and always has been, geared heavily towards regular gas.  That capacity can be shifted to some extent, but in order to make wholesale changes to the system, many billions of dollars worth of upgrades and facility changes would need to be made.

Another factor that has caused diesel cost to rise is the advent of Ultra Low Sulfur Diesel.  While this new and improved diesel is cleaner and more environmentally friendly, it costs more to refine and therefore adds to the cost of a gallon at the pump.  Add on the fact that "the tax on a gallon of diesel is 6 cents higher than on the same gallon of gasoline" and you have your increased costs.

While the factors contributing to the higher cost of diesel are not without merit, there is an argument to be made that cheaper diesel would be better for the US.  As increased diesel prices are added to the production costs of nearly every good made in the US, it becomes obvious that those costs get passed along to consumers.  This, in turn, has slowed economic growth.  When we look at the factors contributing to the rise of diesel costs in the US, the only one that could be altered is the higher tax rate on diesel.  So the argument to be made for reducing diesel costs is that it would actually end up promoting economic stimulus.  Lower transportation costs means lower production costs, which will mean lower prices!