[News Terms] Gasoline, Diesel, Kerosene... What Are Their Characteristics and Differences?

Petrochemical products made by refining crude oil

"For the first time since 2008, diesel prices have surpassed gasoline prices."

Due to the deepening energy crisis in Europe following the Russia-Ukraine war, diesel and gasoline prices have reversed for the first time in about 14 years. This was caused by European consumers shifting their demand toward diesel, resulting in a global shortage. However, diesel, gasoline, and other 'fuels' are all products derived from the same petroleum. So why do fuels derived from the same raw material have such different prices and uses?

LPG, Gasoline, Diesel... Petroleum Properties Change According to 'Boiling Point'

Fuel price board at a gas station in Seoul last May. At that time, the price of diesel exceeded 2,000 won per liter for the first time since 2008. Photo by Mun Ho-nam munonam@

We often think of petroleum as 'fuel,' but crude oil freshly extracted from underground or under the seabed is very unsuitable for use as an energy source. This is because it contains impurities such as sulfur mixed in. Global petrochemical companies like Saudi Aramco, ExxonMobil, and BP usually handle both the drilling business that extracts crude oil from the mining site and the chemical business that processes it into products to sell. The former is called 'upstream,' and the latter 'downstream.'

Therefore, the refining process that converts crude oil into diesel, gasoline, and other products belongs to the downstream sector. Petroleum refining uses heat. This process is called 'fractional distillation,' which involves applying heat at different temperatures to crude oil to produce different products. The properties of the refined products vary according to the boiling points of the crude oil fractions.

Petroleum distilled at temperatures below 30 degrees Celsius produces liquefied petroleum gas (LPG). Heating between 30 and 140 degrees yields gasoline, and between 140 and 180 degrees produces naphtha. Following that are kerosene (180?250 degrees), diesel (250?350 degrees), and heavy oil (above 350 degrees).

Meanwhile, the 'residue' left after petroleum refining undergoes additional processing to make lubricants or asphalt. In other words, crude oil is used as a key material of modern civilization down to the 'last drop.'

Post Russia-Ukraine War European Energy Crisis Spurs International Diesel Price Surge

The characteristics of each petrochemical product differ significantly. For example, LPG (liquefied petroleum gas) is a product liquefied from hydrocarbons contained in the gas produced during refining, so it has a lower calorific value compared to other products.

Gasoline (揮發油, gasoline), which easily evaporates at room temperature, is highly flammable and has strong explosive power. It is suitable as fuel for gasoline engines that move pistons through the explosive force of the fuel. For this reason, gasoline is used in various applications such as automobiles and aircraft industries, and demand is high. On the other hand, diesel (輕油, diesel) has lower volatility than gasoline but superior thermal efficiency, making it ideal for diesel engine fuel. Kerosene (燈油, kerosene) causes less soot and noise compared to other fuels, so it is used to heat household stoves.

Because each fuel has different characteristics, demand varies depending on the situation. Depending on national policies or import-export conditions, the price trends of specific fuels may differ from those of other fuels.

Atmospheric distillation tower of the domestic oil company 'SK Innovation.' Crude oil is refined into gasoline, diesel, kerosene, etc., through the fractional distillation process here. / Photo by SK Innovation homepage capture

Domestically, diesel has been taxed at a lower fuel tax rate than gasoline, which is most commonly used as passenger car fuel. Diesel is widely used not only in diesel vehicles but also in ships, generators, excavators, and military equipment, so it has been considered a more important fuel for the national economy. Therefore, for more than a decade, domestic diesel prices have been cheaper than gasoline.

However, since the Russia-Ukraine war began in March, international diesel prices have surged sharply, causing a 'price inversion' phenomenon in Korea as well. According to data on domestic petroleum product price trends compiled by the Korea National Oil Corporation, gasoline retail prices in the first two weeks of November were 1,659.6 KRW per liter, falling for nine consecutive weeks, while diesel rose by 12.8 KRW from the previous week to 1,884.5 KRW. Diesel prices surpassed gasoline prices for the first time in about 14 years in June and have continued to widen the gap since then.

The cause is attributed to the rise in international diesel prices due to the energy supply crisis originating in Europe. The European Union (EU) reportedly depended on Russian diesel for about 60% of its total demand before the war. However, after the war, the West implemented extensive economic sanctions, forcing Europe to replace its previous import volumes with other countries. As European consumers imported diesel from markets outside Europe, demand suddenly surged, and as a result, domestic diesel import prices also rose sharply.