Demand and Price Discrimination in Fuel Prices

I have to complain about fuel prices. I know that the prices have gone down since the last time I drove but what I want to know is "Why does diesel cost more than gasoline?" The last time I checked, it was cheaper to make diesel than it was to make gasoline. I have a feeling the reason for this insane overpricing of diesel has something to do with demand. The demand for diesel has gone up since 911 due to the fact that the army vehicles run on diesel, and they are being used more. Along with this, the truckers and farmers who have diesel rigs and tractors have to keep buying the diesel no matter how high the price to do their jobs. I know the fuel companies have increased their prices as a result of the somewhat inelastic demand for diesel, but it is insane to be charging more for something that costs less to make. Plus it is just annoying that if you have an older diesel you have to modify it and add fuel additives to your tank every time you fill up to make up for the fact that the diesel is different now than when the vehicle was made. Therefore, you cost of filling up is increased even more.

There is one plus to driving a diesel vehicle. Certain truck stops actually charge 10 cents less a gallon if you pay cash instead of credit card. This is major price discrimination, but it works. If I am taking a long trip, I actually map out where the places that do that are, so that I can get the lower fuel price, and make sure I bring along plenty of cash. There is also other price discrimination that can be found, such as if you have a Kroger plus card and spend $100 dollars at Kroger's in a month every time you fill up you get 10 cents off every gallon. Also Giant Eagle has a program where if you spend money at their store, including buying fuel, you get fuel credits and after so many you get money off of your next fill up. These price discrimination are awesome, but some of these places make up for the difference in their price by charging a high price than everywhere else, so that when you take the ten cents off a gallon, it is actually the same price as every other fuel station.

I do have to say that thanks to this class, I have been able to understand some of the reasons that the fuel companies and fuel stations have for charging higher prices and giving chances for rebates on fuel. Demand and price discrimination have a lot to do with the fuel in our nation.