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Why is diesel demand less elastic than gasoline when prices spike?

Elena Vasquez
Published on 2026-09-24

Why is diesel demand less elastic than gasoline when prices spike?
Diesel productive capacity is concentrated in the US, Russia, the Middle East, China and India, while Europe covers only about 60% of its own needs and imports the rest. That concentration makes supply shocks sharper than in gasoline, which is refined almost everywhere. Demand behaves differently too: drivers can cut mileage when pump prices rise, but trucking, mining and farming cannot easily idle. Estimated demand destruction from a 10% diesel price rise is only 1.2-1.5% in the US and China, versus 3.5% in Japan and Korea and far higher in South and Southeast Asia. China's roughly 25% diesel price increase reflects that cost tolerance.

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  • Hannah Berg 2026-09-25 12:32
    Europe's exposure is the vulnerability to flag. France consumes about 600,000 b/d of diesel and imports roughly half. If the US restricts exports to cool domestic prices, Europe absorbs the shortfall first, hitting transport and agricultural costs directly.
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