Diesel Surges Again, Up 6.8¢ to $3.725
[Stay on top of transportation news: Get TTNews in your inbox.]
The national average price for diesel surged for the second straight week, climbing 6.8 cents to $3.725 a gallon, according to Energy Information Administration data released Jan. 17.
Diesel has risen 11.2 cents a gallon on average in the past two weeks after dropping 12.1 cents over the previous seven weeks. A gallon of diesel now costs $1.029 more than it did at this time in 2021. Gasoline saw an increase as well, 1.1 cents to a national average of $3.306 a gallon.
EIA reported that diesel prices rose in all 10 regions in its weekly survey. The Midwest experienced the steepest increase at 8.1 cents to $3.603 a gallon. That was followed by the Gulf Coast region, where diesel climbed 7.9 cents to $3.463. California saw the smallest gain at just seven-tenths of a cent to $4.789 — still the highest price in the country.
U.S. On-Highway Diesel Fuel Prices
EIA.gov
“I think everybody is raising their expectations now,” Tom Kloza, founder and global head of energy analysis for Oil Price Information, told Transport Topics. “We’ve seen pretty strong markets. There’s so many people that are bullish now, and by people I mean participants in the market for crude oil and even for gasoline, and this is a very low-demand period for gasoline.”
Kloza noted gas prices are moving up despite the low demand because people are afraid to sell it. He added that January is a notably poor month for demand, and this year is no exception. But the problem is, demand is likely to be much higher starting around April and the industry doesn’t have as much refining capacity as it did.
Kloza
“There’s a lot of talk about a hundred-dollars barrel,” Kloza said. “Well, for Brent crude right now, we’ve been at $89. So, we’re not that far from it, $11 away. My own personal view is that we’ll have a moment with triple-digit oil, but it won’t be a month or quarter. And we are going to see much higher gasoline prices. But not yet. Winter demand is just too low.”
Kloza added that the higher crude prices are likely to be more episodic as opposed to a new normal. But he noted diesel is the exception, with prices already trending high; they are at their highest point since 2014.
“I think the first market that may be going a little bit ballistic is the diesel market,” Kloza said. “Diesel molecules can be substituted for natural gas when there are interruptions in natural gas. And we’ve seen a little bit of that in January of 2022.”
Oil trading at $100 a barrel isn't out of the question since Brent crude is at $89, Oil Price Information analyst Tom Kloza says. (Andrey Rudakov/Bloomberg News)
Kloza noted if the cold weather continues, there likely will be more burning of diesel to create electricity, as well as some interruptions. He said that has been the factor he has been watching the most closely recently. There also are international tensions to consider, such as fears that Russia will invade Ukraine.
“I think we’re all hopeful that situation is going to be defused,” Kloza said. “There is certainly a lot of high-powered diplomacy. And if Russia invades Ukraine, there might be a response from many other countries, and they could put some really tough sanctions on them. But that might mean 2 million barrels of crude less per day flowing from the Russian fields to Eastern and Western Europe.”
Want more news? Listen to today's daily briefing below or go here for more info:
