Diesel Price to Fall in Fourth Quarter, DOE Says

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iesel fuel prices in the fourth quarter are projected to average $2.62 per gallon, a decrease of 30 cents from third-quarter prices, the Energy Department said Tuesday.

Diesel is projected to average $2.73 this year and $2.66 per gallon next year, DOE said in its monthly short-term energy outlook.

That was down from September’s outlook, in which DOE said diesel would average $2.81 this year before falling to $2.78 next year. (Click here for previous coverage.)

Part of the reason for the price decline has been higher distillate fuel inventories, DOE said. At the end of September, distillate stockpiles were 23.7 million barrels over the same time last year and 24.6 million above the average of the last five years.

The price of heating oil, which sometimes parallels diesel in winter months, will rise 6% to 7% this winter, DOE said. Both diesel and heating oil are distillate fuels.

Average retail regular gasoline prices experienced the second-largest average monthly decline ever, falling 40 cents from August to September, the report said — only the record 46-cent drop coming off last year’s hurricane season last November was greater.

The average retail price for gasoline is expected to be $2.29 in the fourth quarter, down 54 cents from the third quarter. Regular gasoline prices are projected to average $2.58 in 2006 and $2.51 next year, DOE said.