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February 16, 2021 6:00 PM, EST

Diesel Climbs 7.5¢ to $2.876 a Gallon

Fuel image The price of a gallon of diesel fuel has risen by 13.8 cents the past two weeks. (Getty images)

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The nationwide average price of diesel increased by 7.5 cents to $2.876 a gallon, from $2.801 the previous week, marking the 15th week in a row of increases, according to U.S. Energy Information Administration data released Feb. 15.

Diesel is now 1.4 cents less expensive than it was a year ago, nearly where it was a few weeks before the coronavirus pandemic caused the U.S. economy to slump into a recession and diesel usage to plunge.

According to EIA, diesel increased in all 10 regions in its weekly survey with the biggest jump coming in the Midwest, where the price surged by 10.4 cents per gallon to $2.852 from $2.748 the previous week. That makes diesel now 9.5 cents a gallon less expensive than it was a year ago in the Midwest.

According to industry analyst Tom Kloza, founder of the Oil Price Information Service, diesel’s price is rising fast (especially in the Midwest and East) because of extreme cold temperatures. Home heating fuel is made from diesel and because of subzero temperatures sweeping much of the country, demand is very high.

“It’s going to send home heating oil and diesel up, and they’ve been pretty strong lately,” Kloza said. “This is kind of like a winter hurricane.”

The deep freeze is also hampering the nation’s refining capabilities. Some Texas facilities are shut down as the Lone Star State dealt with record subzero temperatures and officials who run the electric power grid rationed power and conducted rolling blackouts to deal with the accelerated demand.

According to the EIA, Texas produces an estimated 4.6 million barrels of oil per day and is home to 31 refineries, the most of any state.

Meanwhile, the price of regular unleaded gasoline also jumped by 4 cents a gallon nationwide to $2.501 from $2.461 a week earlier. Unleaded is now 7.3 cents more expensive than it was a year ago.

“We’re up about 10 cents a gallon now on gasoline, especially in the Gulf Coast region,” Kloza said. “Gulf Coast gas on Feb. 16 was up 10.5 cents a gallon.”

The EIA survey was compiled before the cold snap began to impact much of the country.

The most expensive diesel remains in California, where it’s $3.635 a gallon, up 7.7 cents from $3.558 the previous week. Diesel in that state is 13.9 cents less expensive than it was a year ago.

The least expensive diesel in the nation remains in the Gulf Coast region, home to much of the country’s oil production and refining capability. Diesel increased 6.1 cents per gallon to $2.627 a gallon, up from $2.566 the previous week. Diesel there is 3.1 cents less expensive than it was a year ago.

Even with the sharp increase in diesel and gasoline prices the past three months, Kloza believes that prices will begin to stabilize once the cold snap is over.

“There’s a lot of gasoline and a lot of oil out there,” Kloza said. “All of a sudden you have 4 million-plus barrels of Gulf Coast refining capacity that has been shut by the cold. I suspect we’ll see it come back on soon. I still think we are closer to the average, or the high for the year, than on the fourth rung of a ladder up to $3 a gallon. Sometimes you get an early peak.”

Furthermore the price of West Texas Intermediate, the industry’s benchmark for crude, crossed the $60-per-barrel threshold on Feb. 16 before closing at $59.93 a barrel. A year ago, WTI was $52.29 a barrel before crashing to minus $37.60 a barrel on futures contracts on April 20, during the worst of the coronavirus pandemic. Oil recovered the next day to $11.57 a barrel.

The number of U.S. operating oil rigs continues to steadily increase, even with the bitter cold in much of the oil-producing basin. The weekly Baker-Hughes Rig Count showed an increase of five rigs for the week ending Feb. 12, pushing the number to 397. That figure is still down 393 from the same period last year when 790 rigs were in operation.

U.S. On-Highway Diesel Fuel Prices

EIA diesel fuel chart

EIA.gov

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