Diesel prices drop for tenth straight week

Diesel gasoline’s average price per gallon fell 6.5 cents this week to $2.112 per gallon, according to data issued by the Department of Energy’s Energy Information Administration.

This marks the tenth straight week of declines for a cumulative 38 cents with the current average price at its lowest level since the week of March 23, 2009, when it was at $2.09. The previous lowest comparison week prior to this week’s decline was the week of May 4, 2009, when it was as $2.185.

On an annual basis, the average price per gallon is down 82.1 cents annually.

The Department of Energy’s Short-Term Energy Outlook recently called for the 2015 average price of diesel to be $2.71, with 2016 expected to be lower at $2.67. It also called for WTI crude oil to hit an average of $49.08 in 2015 and $50.89 in 2016.

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.

Crude oil is trading at $27.32 per barrel, which is its lowest level going back to 2003.