Diesel Spike of 9.7¢ Is Most in More Than Three Years
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Diesel jumped 9.7 cents a gallon, the largest leap in more than three years, according to data released by the Energy Information Administration on Feb. 22.
Trucking’s main fuel now costs $2.973 after rising for the 16th consecutive week. This week’s gain marked the largest since a 9.4-cent spike Sept. 4, 2017.
Diesel now costs 9.1 cents more than at this time a year ago, just before the COVID-19 pandemic plunged the U.S. economy into a deep recession and demand for oil and gasoline plummeted.
Highlights
• The price of a gallon of diesel has increased 17.2 cents in the past two weeks.
• Diesel now costs 9.1 cents more than it did at this time last year.
• This week’s increase is the largest since a 15.3-cent spike Sept. 4, 2017, and marks the first of at least 9 cents since it rose 9.4 cents Sept. 23, 2019.
• The average price of a gallon of gasoline jumped even more, 13.2 cents, to hit $2.633, which is 16.7 cents per gallon more expensive than a year ago.
The latest shock wave to oil, gas and diesel prices is the massive supply chain interruptions both at the well and refinery level in Texas, which still is in the early stages of a massive clean-up. Several days of snow, ice and bitter cold temperatures caused massive blackouts and froze natural gas and oil production infrastructure, and shut down refineries.
Diesel increased in all 10 regions in EIA’s survey, with the biggest coming in the Lower Atlantic. The price there increased by 12.3 cents per gallon to $2.921 a gallon. Diesel now is 14.2 cents a gallon more expensive in that region than it was a year ago.
Diesel rose by at least a dime in five regions: Besides the Lower Atlantic, the East Coast, West Coast, West Coast less California and California all saw increases of at least 10 cents. California has the highest price for diesel at $3.739, up 10.4 cents per gallon. The least expensive price is in the Gulf Coast, where it was up 9.5 cents per gallon to $2.722.
U.S. On-Highway Diesel Fuel Prices
EIA.gov
The price of unleaded gasoline increased by an even greater amount; it surged 13.2 cents to $2.633. Gas is now 16.7 cents a gallon more expensive than it was a year ago.
According to a new filing with the Texas Commission on Environmental Quality, the agency in Austin that regulates refineries, major oil refineries in Baytown, Beaumont-Port Arthur and Corpus Christi have restarted some operations, but the rest of the Houston area’s refining capabilities are taking longer to restart after the lengthly power failures.
Flynn
The report says at least 2.3 million barrels per day in oil refining has resumed, including at the Motiva Enterprise refinery. North America’s largest refinery is partially operational but may not be fully back until March 11. It’s estimated that refining capacity remains down 2 million barrels per day.
Oil industry analyst Phil Flynn told Transport Topics the lingering effects of the severe weather will take weeks to repair meaning costs will rise.
“Gasoline and diesel prices were creeping up pretty quickly before the deep freeze,” Flynn said. “While the refineries are going to be coming back on line, next up, many of the refineries are going to be off line in the spring for routine maintenance. I think we’ve got a really good chance to see $3 a gallon gasoline.”
For diesel, Flynn says he would not be surprised to see the national average climb above $3.25 a gallon in the spring.
“We got used to low fuel prices for a while, and I think we’re waking up to the fact these prices aren’t going to stay cheap.”
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Even with the steep price increases in oil, diesel and gasoline, Oil Price Information Service founder and industry analyst Tom Kloza told TT he believes the price of oil is likely to stabilize in the coming weeks, especially as more refining capacity returns.
He also said the rising prices are not justified as demand still remains low for petroleum products.
“We’ve had a runaway market here,” Kloza said. “We’re due to give back some of these gains; we’ve moved too fast, too quickly.
Our own OPIS survey shows that gas demand, on a year-over-year basis was down 26%. Crude oil demand has dropped because so many refineries have lost power, yet the paper traders have chased crude oil prices higher.”
The latest EIA report says that this year, gasoline consumption will remain far below 2019 levels as fewer people drive due to the pandemic.
The EIA forecast says gasoline consumption will rise to an average 8.6 million barrels per day this year and 8.9 million barrels in 2022, up from 8 million in 2020 but lower than the 9.3 million consumed in 2019.
West Texas Intermediate crude oil, the industry’s benchmark, closed Feb. 23 at $61.67 a barrel, which still is about $12 a barrel more than it cost a year ago, when it closed at $49.90.
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