DOE Projects Continued High Diesel Prices

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etail diesel fuel prices are expected to hit their highest average monthly level ever in October, at more than $3 a gallon, the Department of Energy said Wednesday.

That price would also be the highest diesel price in more than 50 years, adjusted for inflation, DOE said in its monthly Short-Term Energy Outlook.

The department reported a 0.6-cent diesel retail price uptick Tuesday to $3.15 a gallon, a record. (Click here for related coverage.)

DOE projects fourth-quarter diesel fuel prices to average $2.85, an increase of 29 cents over third-quarter prices, and “prices could be significantly higher if winter weather is colder than currently predicted,” the outlook said.

For October, DOE predicts diesel will average just over $3 a gallon, then it projects $281.8 in November and $2.733 in December.

U.S. petroleum demand in 2005 is projected to average 20.5 million barrels per day, or 0.9% less than 2004.That is 290,000 barrels a day less than that projected in DOE’s previous outlook.

DOE also trimmed world petroleum demand by 500,000 barrels a day through the end of this year from its previous outlook, to 1.2 million barrels a day.

Home-heating oil prices were projected to rise 32% this winter, while natural gas prices were projected to rise 48%. Heating oil is often a surrogate for diesel fuel and their prices parallel each other in the winter, as both are distillate fuels.