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SIn addition to changes in demand mix, changes
in diesel quality affect price. As
expected, European ultra-low sulfur diesel (ULSD) has been commanding a
premium over heating oil. That
differential has averaged about 13 cents per gallon over the past year.
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SIn the U.S., New York Harbor diesel spot
values have averaged about 4 cents per gallon over heating oil.
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SThe high European prices for ULSD likely
helped to pull other distillate fuel prices up as well.
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SThe question is whether the European
differential is being driven more by
transition issues than by longer term factors. Will the U.S. see these kinds of price
differences? Or will the U.S. ability
to supply ULSD help to ease the price difference and result in lower
differentials between heating oil and diesel
fuel?
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SBecause
we are seeing and will see transition issues associated with ULSD this
year and next, it is hard to determine how these factors will play out in the
long term.
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