By Frederick Kiel, Staff Reporter
This story appears in the March 16 print edition of Transport Topics.
The U.S. retail diesel fuel average dropped 4.2 cents last week to $2.045 a gallon, as the price in the Midwest fell below $2, the first time that has occurred anywhere in more than four years, the Department of Energy reported.
Eight consecutive declines in national diesel prices totaled
26.9 cents, DOE said after its March 9 survey of fueling stations. Separately, the agency’s Energy Information Administration projected diesel may not fall much further but likely would remain stable for the remainder of 2009.
“In this country, unlike Europe, diesel is being used primarily for trucks that move goods . . . so it’s pretty highly influenced when demand for freight drops,” EIA economist Neil Gamson told Transport Topics. “We’re also coming out of the heating season, and that makes more distillates available for diesel, increasing supply as demand falls.”
In DOE’s Midwest region, diesel fell 4.2 cents to $1.988 a gallon. The last time diesel was below $2 was January 2005, when the national average was $1.959 a gallon, Gamson said.
DOE also reported that gasoline rose 0.7 cent a gallon to $1.941. Gasoline had fallen steadily from its July 7 record of $4.114 a gallon to $1.613 on Dec. 29, but its prices have been mostly rising since then.
The retail diesel price was down $1.774 a gallon nationally from a year ago, and gasoline was down $1.284, DOE data showed.
American Trucking Associations estimate that U.S. truckers burn 752 million gallons of diesel weekly and 285 million gallons of gasoline. At those rates, truckers paid $1.33 billion less for diesel last week than a year ago, and $365.9 million less for gasoline.
EIA said in its latest “Short Term Energy Outlook” issued March 10, the diesel average would bottom at $2.086 in March but then climb only as high as $2.266 at the end of the year. It also estimated diesel would rise back above $2.50 by the middle of 2010.
“Because of the global weakness in industrial output, it is possible that we will see diesel prices fall below gasoline prices this summer,” EIA’s report said. “The expected continuing decline in diesel fuel consumption in the United States this year, as well as the growing weakness in distillate fuel usage outside the United States, are projected to result in a narrowing of refining margins for distillate throughout the forecast period.”
EIA also said that, although gasoline prices have been slowly increasing over the past two months, “retail gasoline prices are projected to average $1.96 per gallon in 2009 and $2.18 per gallon in 2010.”
The price of crude oil on the New York Mercantile Ex-change dropped more than $3 a barrel on March 11 from the day before to settle at $42.33 a barrel. Bloomberg News attributed the declined to a DOE report that found U.S. crude reserves jumped 749,000 barrels to 351.3 million barrels in the latest week.
Crude is down more than $110 a barrel from its all-time high, set during July.
