Diesel prices rose this week for the first time after 14 straight weeks of declines, according to data issued by the Department of Energy’s Energy Information Administration (EIA).
The average price per gallon headed up 0.3 cents to $1.983 and is up 91.7 cents compared to the same week last year. Last week’s average of $1.980 was the lowest weekly average going back to the week of January 24, 2005, when it was at $1.959 per gallon.
During the 14 weeks of declines, prices fell a cumulative 50.2 cents, with several of these weeks reaching low price levels not seen in several years.
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.
Benchmark crude oil is currently trading at $31.48 per barrel on the New York Mercantile Exchange after heading up $1.84 in its most recent trading session.
LM Columnist Derik Andreoli recently wrote that the current oil oversupply is not likely to be worked off over the course of the year, explaining that this suggests that although there will be significant volatility, prices should follow a horizontal trend, meaning that prices are expected to remain around $30 per barrel.