Diesel Average Rises 0.8¢ to $2.944 as Warmer Weather Slows Increase
This story appears in the March 16 print edition of Transport Topics.
A gradual thawing out from the recent blast of cold weather that engulfed much of the United States helped slow the retail diesel and gasoline price increases last week, the Department of Energy reported.
The U.S. diesel average price edged up 0.8 cent to $2.944 a gallon, which was the fifth straight jump for a total of 11.3 cents. Last week’s gain followed three straight weeks when the national average increased at least 3 cents a gallon.
The diesel average price has held under $3 since mid-January, and before its recent gains, it had plunged $1.09 since June. It also is $1.077 below its level a year ago, when it was $4.021, the highest price of 2014.
DOE also said after its March 9 survey of fueling stations that the gasoline retail average price gained 1.4 cents to $2.487, the smallest of its six consecutive increases.
Gasoline has jumped 44 cents since January, although last week’s price was $1.025 below the corresponding week last year.
A DOE analyst said diesel prices probably will come down, now that winter’s coldest weather has passed.
“I don’t see any reason why diesel prices would not come back down” after distillate demand that peaked in the past month, said Sean Hill, an analyst with DOE’s Energy Information Administration.
That was because of “how cold February was, especially in the Northeast, where most heating oil is consumed,” Hill told Transport Topics.
“Last year at this time, diesel prices went through the roof,” he said. “The reason they didn’t this year was because oil prices were so low to begin with, and diesel inventories were in better shape this year, too.”
Diesel and heating oil are distillate fuels, and cold-weather demand generally pushes prices higher in the winter.
Last week, EIA also released its monthly short-term energy outlook, which projected that diesel and gasoline will average $2.89 and $2.39, respectively, this year — both a nickel higher than its February projection.
Even though the report lowered its forecast for U.S. West Texas Intermediate crude oil by $3 to about $52 a barrel, it raised its projection for globally traded Brent crude oil by $2 to $59.50 a barrel.
“In our forecast, we use Brent as the main driver for both gas and diesel prices,” Hill said. “Bumping up the Brent price in 2015 bumped up the diesel and gas a little bit, too.”
Brent oil fell to a one-month low last week, closing at $56.39 a barrel March 10, compared with WTI, which finished at $48.29 a barrel on the New York Mercantile Exchange.
EIA projected diesel will not average $3 nationally until November and said it will climb to $3.25 in 2016 as oil prices move higher. Next year’s price outlook revision was 2 cents higher than its previous projection.
Gasoline will average $2.72 a gallon in 2016, down a penny from the previous forecast, the report said. Last year, diesel averaged $3.83 and gas averaged $3.36.
“U.S. commercial crude oil inventories, which are already at the highest level since 1930, are expected to continue growing over the next two months,” EIA Administrator Adam Sieminski said in a statement after the outlook’s release.
“Gasoline prices have recently been driven higher by increasing crude oil costs, as well as several unplanned refinery outages,” he said, adding that, even with the recent increases, U.S. households will save about $710 in gas costs this year, down from a previously estimated $750.
