Diesel Declines 3.3¢ to $3.931; U.S. Exports of Fuel Grow

U.S. diesel prices declined for a second straight week, while gasoline declined for a third consecutive week, according to the Department of Energy.

DOE said Dec. 5 that the average price of a gallon of U.S. retail diesel was $3.931, down 3.3 cents from the previous week. A year ago the average stood at $3.197.

DOE’s Energy Information Administration said that the gasoline average dipped by 1.7 cents a gallon to $3.29, compared with $2.958 a year ago.

Gasoline has declined more consistently than diesel since early May, when both products peaked for the year. Gasoline has its greatest demand within the United States, whereas diesel is the more global commodity. Figures from EIA show that U.S. refineries have remained busy by exporting diesel and other refined products abroad.

“It looks like the U.S. will be a net exporter of refined products this year for the first time since almost World War II. Most of this is going to Central and South America,” said Tom Kloza, publisher and chief analyst of the Oil Price Information Service in Wall, N.J.

“Diesel is the product of greatest growth. U.S. refineries have topped 5 million barrels a day in distillates for the first time ever,” Kloza said. DOE says the last time the country was a net exporter of refined petroleum was 1949.

“Since 2008, exports of refined products from the U.S. have started going to more countries,” said Tancred Lidderdale, an EIA senior economist. Prior to 2008, Lidderdale said, U.S. diesel exports mainly went to Mexico, which has an abundance of crude oil but little refining capacity. U.S. refineries are also doing better than Europe’s, and that has led to the increase in exports.

“Since the recession, there was a larger decline in capacity and throughputs in Europe than in the United States. Because there was no demand growth for petroleum in Europe, they actually had shutdowns in refinery capacity there,” said Lidderdale.

The market for domestically refined diesel goes far beyond the nation’s borders. In September, the most recent month of export data at EIA, 576,000 barrels a day of ultra-low-sulfur distillate — mainly diesel — was shipped abroad. The Netherlands took the most at 121,000 barrels a day, with Mexico second at 111,000 barrels a day.

Four other major consumers, all in barrels per day, were Chile, 83,000; Turkey, 67,000; and Colombia and Gibraltar, 41,000 each.

For the year’s first nine months, ultra-low-sulfur distillate exports averaged 519,000 barrels a day. For all of last year it averaged 314,000 a day and 235,000 in 2009.

Kloza described gasoline as a “parochial” interest of the United States, and its price has declined by 17% from its May 9 peak of $3.965 a gallon to its Dec. 5 level.

In contrast, diesel is just 4.7% off its May 2 peak of $4.124.

Diesel rose in five of six weeks from Oct. 10 to Nov. 21, from $3.721 a gallon to $4.01. Since then it has dropped by 7 cents a gallon over two weeks.

Crude oil futures contracts on the New York Mercantile Exchange closed below $100 a barrel on Dec. 8, breaking a string of six trading days during which prices closed above the century mark. Bloomberg News reported analysis saying that oil rose above $100 based on good employment news in the United States, but fell below after the European Central Bank said it could not prop up the debt European governments on an unlimited basis.

While the cost of retail diesel is below $4 a gallon in most of the country, in California, which uses a special formulation, the average price was $4.172.