By Michele Fuetsch, Staff Reporter This story appears in the March 24 print edition of Transport Topics.
The retail diesel average slid 1.8 cents last week to $4.003 a gallon but stayed over $4 for the fourth consecutive week, the U.S. Department of Energy reported.
Diesel has fallen two of the past three weeks, but it has been on a cost run-up since Jan. 27 when the average retail price was $3.904.
At this time last year, however, diesel had been over $4 a gallon for seven weeks, and the average per-gallon price was 4.4 cents higher, DOE said.
Gasoline, meanwhile, advanced 3.5 cents last week. The average retail price hit $3.547 a gallon compared with $3.512 the week before, DOE said.
Gasoline has been rising steadily for six weeks, adding nearly 29 cents to its price of $3.309 on Feb. 17. A year ago, it was $3.396 a gallon.
Diesel continues to top $4 a gallon because distillate supplies are on the low side, said Denton Cinquegrana, chief oil analyst for the Oil Price Information Service in Wall, N.J.
“And demand this past week was pretty strong,” he told Transport Topics on March 19. “It’s the second time this year that it’s been over 4 million barrels a day. The last time we saw a number that was above 4 million was a little over a month ago in the height of the deep freeze.”
According to DOE’s Energy Information Administration, the supply of distillate, from which diesel and heating oil are produced, fell to 110.8 million barrels March 14 from 125 million barrels Jan. 3.
No one factor has kept diesel prices over $4. Instead, several, including a severe winter, have contributed, Cinquegrana said.
One factor is that as the nation increasingly depends on oil extracted from shale formations as opposed to traditional oil wells, distillate production becomes more costly, he said.
“Everyone talks about the shale revolution and all the light sweet crude that we’re producing now, but when you refine it, you actually don’t get as much diesel as you might from other more traditional streams of crude oil,” Cinquegrana said. “You actually get more gasoline out of the shale.”
And distillate is the “global fuel,” another factor that keeps diesel prices higher than gasoline prices, he said, as the United States increasingly exports much of the diesel it produces.
The price of crude oil fell 94 cents March 20, closing at $99.43 on the New York Mercantile Exchange. Prices a month ago were over $100 a barrel.
On the gasoline side last week, the uptick in price was probably a short-term, seasonal event because as winter eases, people hit the road again, Cinquegrana said.
“Overall, gasoline demand’s going to be pretty flat this year versus last year,” he said.
