Diesel Spends Much of Year Around $4 a Gallon

This story appears in the Dec. 24 & 31 print edition of Transport Topics.

A graph of diesel’s prices in 2012 resembles a roller coaster, with big surges in the spring and fall topping $4 a gallon, with each soon followed by relatively steep declines.

The increases followed higher oil prices, while the low periods trended down with crude, the primary mover of end-fuel prices.

For the year, diesel averaged $3.97 a gallon into mid-December, up from last year’s $3.84 average, according to U.S. Department of Energy figures.

Diesel hit its first-half peak of $4.148 in early April, after jumping 36.5 cents in 12 gains over a 14-week period from the beginning of the year.

Following that surge, diesel plunged 50 cents in 12 consecutive declines, according to DOE’s weekly price survey.

During the spring run-up, analysts cited low distillate inventories — distillates include diesel and heating oil — as contributing to the price jump.

Analysts also cited continued high U.S. refined diesel exports as a factor in pushing prices higher.

April exports of distillate products reached almost 1 million barrels a day — the highest since monthly U.S. trade data began being recorded, according to DOE.

Later in the year, a second string of increases pushed trucking’s main fuel to its highest level in more than four years, hitting $4.15 a gallon in mid-October before receding below $4 in mid-November.

The downturns were short-lived, however, with the price turning higher immediately after Thanksgiving, jumping almost 6 cents to top $4 again before sliding below the $4 mark in early December.

Diesel’s all-time high was $4.764, set in July 2008.

One analyst said in late November that continued low inventories coupled with ongoing diesel exports could lead to higher pump prices next year.

“These are very scary low inventories for diesel,” Tom Kloza, chief analyst with the Oil Price Information Service, said just after Thanksgiving.

He said lower-than-normal winter temperatures could put pressure on diesel prices by boosting heating oil demand.

And with heating oil stocks down following Hurricane Sandy, “we probably need to cross our fingers and hope that we see a mild winter,” he said.

“Most refiners are making as much diesel as they can since it affords a nice profit, but that may not be enough,” Kloza said.

“I would not be surprised at some point in early 2013 to look up and find typical diesel prices at truck stops in the $4.75 [per gallon] range, even as gasoline is $3.50 or less,” he said, adding that “to some extent, this evokes memories of 2008.”

Oil prices — generally the main driver of end-fuels — followed a similar pattern to diesel, peaking at almost $110 a barrel in late February, holding at more than $100 through March and April and then dropping sharply in May and June.

Crude’s peak New York Mercantile Exchange closing price was $109.77 on Feb. 24, while its low was $77.69 on June 28, according to Bloomberg News Nymex figures — a $32 plunge.

After a second-half peak of nearly $99 a barrel around Labor Day, the price tailed off and held between $85 and $90 into the fourth quarter.

Gasoline also had two major price surges this year, peaking at $3.941 a gallon in early April before falling to a 2012 low of $3.356 in early July.

The motor fuel jumped to a second-half peak of $3.88 in mid-September before a string of downturns, in which it plunged more than 52 cents in three months, falling to $3.35 in mid-December.