Diesel Drops 1.8¢ to $2.404 a Gallon

A transport truck fills up in Illinois. (Daniel Acker/Bloomberg News)

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The price of diesel dropped 1.8 cents to $2.404 a gallon in its third consecutive decline, the Energy Information Administration reported Sept. 21.

Gasoline fell 1.5 cents to $2.168 a gallon.

Trucking’s main fuel now costs 67.7 cents less than it did a year ago. EIA said diesel declined by a penny or more in nine of the 10 regions it surveys every week.

The biggest drop was in the Midwest, where diesel declined 2.6 cents per gallon to $2.282. Diesel is 71 cents a gallon less expensive in that region than it was at this time in 2019.

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The smallest decrease was in New England. Diesel there dropped four-tenths of a cent to $2.601 a gallon. Diesel is 46.9 cents less expensive in that region than it was a year ago.

The most expensive diesel remains in California at $3.257, down a cent from a week ago. Diesel in the Golden State is 71.9 cents less expensive than it was a year ago.

The least expensive diesel remains in the Gulf Coast region, home to most of the nation’s oil and gasoline production and refining capacity, and substantially lower transportation costs. Diesel costs $2.157 this week, 1.5 cents a gallon less than at this time in 2019. Diesel along the Gulf Coast is down 70.1 cents a gallon from last year’s level.

Kloza

Oil industry analyst Tom Kloza, founder of the Oil Price Information Service, said demand for diesel, gasoline and other petroleum products remains soft. On Sept. 21, he pointed out the price of oil declined nearly $2 a barrel, off its recent high of nearly $41, directly impacting the price of gas and diesel.

“There’s been a vicious sell-off in U.S. gasoline markets,” he said. “So far today, removing 6 to 7 cents per gallon from wholesale prices. If an oil tanker passes you on the highway, its cargo has dropped by $560 since leaving the terminal on the way to the station. Last week was the ugliest demand week since June.”

The drop in prices comes even as much of the nation’s oil and gasoline production and refining capability were temporarily shut down by Hurricane Sally. But the oil industry got a break, at least for a few days, when the storm moved farther east toward Alabama and the Florida panhandle. Some oil workers began returning to oil platforms, and refineries were restarted faster than expected.

However, some of those same workers were forced back to land as Tropical Storm Beta came ashore in the Gulf of Mexico on Sept. 22, posing a threat of flooding rain, storm surge and gusty winds to parts of Texas and Louisiana into midweek. But Beta is not expected to cause as much of a disruption to oil and gas as Sally, and earlier, Hurricane Laura. According to the Bureau of Safety and Environmental Enforcement, which monitors and regulates off-shore energy production, 8.5% of the Gulf’s oil and gas volumes remained offline Sept. 21 from the effects of hurricanes Laura and Sally.

U.S. average on-highway #diesel fuel price on 9/21/2020 was $2.404/gal, DOWN 1.8¢/gallon from 9/14/2020, DOWN 67.7¢/gallon from year ago https://t.co/PgONpOjGWZ #truckers #shippers #fuelprices pic.twitter.com/R75x6xw4XZ — EIA (@EIAgov) September 22, 2020

U.S. average price for regular-grade #gasoline on 9/21/2020 was $2.168/gal, DOWN 1.5¢/gallon from 9/14/2020, DOWN 48.6¢/gallon from year ago https://t.co/G9ARCyDszP #gasprices pic.twitter.com/ZCodVwPJ11 — EIA (@EIAgov) September 22, 2020

Kloza said the price of crude and diesel fuel is likely to remain low for the foreseeable future, mirroring demand domestically and internationally, especially as the world continues to battle the coronavirus.

“You had to go back to late August and early September 1997 to find demand for diesel that has been that low,” he said. “You really wonder if there is something going on that we’re just not picking up on.”

Meanwhile, the weekly Baker Hughes rig count, which measures the number of active oil rigs internationally and domestically, remains flat.

Two-hundred fifty-five rigs were operating in the U.S. last week, up one from a week ago. However, that’s down 613 from last year at this time when 868 were in operation.

In Canada, 64 rigs were running, up 12 from a week earlier but down 55 from Sept. 18, 2019. Internationally, Baker Hughes said 747 rigs were in operation, up four for the week but a decline of 391 from a year ago.

Flynn

Oil industry analyst Phil Flynn with The Price Futures Group told Transport Topics the glut of world oil may increase by as much as a million barrels a day by the end of 2020 as Libya resumes production.

“How will the OPEC + nations compensate with Libya being back online?” he said. “Oil prices are lower on turmoil, whether it be from Mother Nature or politics.”

Earlier this year, as world oil demand plunged, the OPEC + nations cut their production by 10% to try to balance supply and demand issues, and stabilize prices. Oil has recovered from its mid-April slump when it reached $21.44 a barrel.

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