Diesel prices drop another 4 cents to $2.031 per gallon, reports EIA

The average price per gallon for diesel gasoline fell for the 12th straight week, with a 4 cent decline to $2.031.

Over this 12-week stretch of declines, diesel prices have dropped a cumulative 46.1 cents. And the current average price per gallon is now at its lowest level since the week of March 16, 2009, when it was at $2.017 per gallon. The previous lowest comparison week prior to this week’s decline was the week of March 23, 2009, when it was at $2.09.

Compared to the same week a year ago, the average price per gallon is down 80 cents.

The Department of Energy’s Short-Term Energy Outlook recently called for the average price per gallon for diesel to be $2.29 in 2016 and $2.59 in 2017, and WTI crude oil’s average to be $38.54 in 2016 and $47.00 in 2017.

Because of the volatile nature of fuel prices, shippers are accustomed to tough negotiations with carriers on fuel surcharges. Now that diesel prices have fallen, shippers say more will be expected of them to keep those savings for their companies.

Shippers say that the current ongoing decrease in diesel costs is beneficial from a financial perspective, and after several years of high fuel costs, many shippers began tracking diesel much more closely.

In the past, diesel had cost more than gasoline because U.S. refineries export much of their diesel output. That leaves less available for the domestic market, and federal taxes are higher for diesel than for gasoline. But as gasoline demand has risen around the world, refineries are running full out worldwide to meet that demand, resulting in a relative glut of diesel fuel, experts say.
 
Oil analysts explain that the drop in diesel would indicate a worldwide glut in crude oil is becoming a glut in refined products as well. This could keep diesel prices at these depressed levels well into 2016, they say.
 
The drop in diesel costs also is a result of heavy investments by refiners in recent years to make a range of products known as “middle distillates” that include diesel, jet fuel, heating oil and kerosene.

The average price per barrel of crude oil was at $30.09 earlier today.

Various reports maintain that with oil production levels remaining high, it is unlikely the decline in prices will abate soon. The Wall Street Journal recently reported earlier today that oil prices have dropped about 18 percent since the beginning of 2016, with analysts saying prices are likely to stay volatile.