Diesel Tank Cap Leaks..

Are these caps at the very top of the tank? Teflon will not work as fuel will eat it eventually. There are several thread sealants made by permatex and others that are rated for fuel, these can be found at automotive stores. I would also check your fill hose, vent hose, fuel sender, and their connections very good, You should be able to feel the fuel around where it's leaking. (slippery). If you filled up too much, you should have NO leakage inside the boat, it should all go overboard through your vent line, so you definately have something wrong.

That will come as a shock to a great many in the fuel handling industry who have been using PTFE tape for many years with great success.
http://www.designnews.com/author.asp?doc_id=270412

It will also wreak havoc in the petrochemical industry where it is used to line piping: http://www.crp.co.uk/industries.aspx?page=160

and is used for gaskets and other sealing applications.

There are places where PTFE tape should not be used but the reasons for that are most certainly not because diesel fuel "eats" teflon. The main reason being improper application by amateur or careless mechanics.

To choose the appropriate thread sealant, look for it's chemical resistance to fuel (diesel or gasoline) or oil running through the line. Backyard mechanics will tell you they've used regular old gas resistant teflon tape (yellow stuff) with success. This is not recommended because it risks breaking free. Liquid or paste type thread sealants are kinder to sensitive components down stream. Mechanics repairing injectors, fuel pumps and carburetors can tell you first hand it is not uncommon to trace fault in the fuel component to clogging from a piece of teflon tape that washed off the ends of the threads, clogging in the first tiny micron orifice it encounters, if not the fuel pump then an injector or carburetor gallery. Either way it's a costly repair. Liquid or paste type sealant won't clog. For gasoline, regular old gasoline resistant Aviation Form-a-gasket Number 3 is the best option. Another product also offered by Permatex is the High Temperature Thread Sealant. Tech data on this sealant says it has medium solvent resistance and is recommended for fuel sender type applications. With the advent of ethanol present in modern gasoline, I favor Form-a-gasket No. 3 which specifically states solvent resistance to gasoline, especially on modern engines that use injectors rather than carburetors such as the E-TEC and HPDI (high pressure direct injection) and any diesel engine.

Whenever making these connections from a threaded port to hose barb connection, ABYC guidelines call for two hose clamps at each connection point of fuel line over hose barb. Be sure the clamps are a marine grade stainless steel type with even sealing tension. Doubling up the clamps does requires a hose barb long enough to fit both clamps. If you are installing fuel tanks or repowering a vessel, be sure to consult a professional or at minimum have your finished work inspected to be sure there are no siphoning and fuel leak hazards. It is a good idea to have the system pressure tested by a professional anytime you make alterations to a fuel line assembly.

http://www.jamestowndistributors.com/userportal/document.do?docId=563

Bottomline, the Permatex for diesel fuel fittings is the safe bet and what is many manufacturers dealership employees use and recommend. I don't believe your standard white Home Depot PTFE thread tape is solvent resistant.

If those "fuel caps" are being used as filler caps and have tapered pipe threads and they are where the fuel is leaking, yes.

That needs a bit more explanation. Pipe caps do not usually have a gasket in them. They rely on a pipe sealant such as PTFE tape or paste type sealer to prevent leaking along the threads and also require being tightened properly. Using a pipe cap for a filler cap is not the best idea, they are not designed to be fitted and removed frequently, particularly if expected to be leaktight. Normally a proper fuel filler cap is threaded onto the "stub."

He might have the same style cap on the top of the tank that Cabo used on their aft tank for years. I forget who manufactured it, but it was either an aluminum or s/s tube with straight threads, had a heavy plastic cap with a rubber gasket in it. It used to seal 100% in my experience if it was tight. Cabo went away from it when Brunswick bought them as Brunswick felt it was a liability issue, but it was nice as you had access right at the top of the tank.

How does one get the fuel hose to the top of the tank? On some boats that could be quite a number of feet?