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The national average price for diesel slipped 4.6 cents to $3.674 a gallon, according to Energy Information Administration data released Dec. 6.
Diesel has decreased 6 cents over the past three weeks after rising for nine consecutive weeks prior to Nov. 22. A gallon now costs $1.148 more than it did at this time in 2020.
EIA reported that all 10 regions in its weekly survey showed declines. The Midwest saw the largest drop at 6.6 cents to $3.536 a gallon. New England experienced the smallest drop at 1.2 cents to $3.654. California has the most expensive diesel, dropping just 2.9 cents to $4.789.
U.S. On-Highway Diesel Fuel Prices
Gasoline fell 3.9 cents nationwide to $3.341 a gallon. It costs $1.185 more than a year ago. Gas prices declined in all regions. The Midwest saw the biggest drop at 6.4 cents to $3.107. The West Coast minus California saw the smallest drop at four-tenths of a cent to $3.782.
The 23rd OPEC and non-OPEC Ministerial Meeting was held virtually Dec. 2. in Vienna. During the meeting the participants reaffirmed an earlier decision to adjust upward its monthly overall production by 400,000 barrels per day for January.
Attendees also took note of the pandemic. The participants agreed to keep the meeting in session pending further developments and continue to monitor the market and make immediate adjustments if required.
Despite the availability of vaccines for nearly a year, the situation remains volatile. The World Health Organization designated the omicron variant as a concern Nov. 26 after researchers in South Africa had identified it.
“The latest report by the EIA illustrates the sensitivity of energy and fuel prices are with the possibility, though unlikely, of more domestic economic shutdowns resulting from COVID variants,” Ryan Marx, senior manager of fuel and product supply at Ryder System Inc., told TT. “The markets keenly remember the magnitude of the price decline in Q1 2020 so when news comes out of a new variant it’s ‘risk off’ with energy traders.
"Nevertheless, the overall energy complex remains in a strong demand and tight supply environment, which will more than likely result in prices continuing to climb higher this winter.”
Ryder System, headquartered in Miami, is the parent company of Ryder Supply Chain Solutions, which ranks No. 11 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
Price Futures Group Senior Energy Analyst Phil Flynn is not optimistic that the recent diesel price decreases will take hold. He noted that prices might go down another few cents in the weeks ahead, but ultimately they’re going to start edging back up.
We think that OPEC is going to have a hard time raising productions and keeping prices shut down. So our expectation is that the market is going to be undersupplied.
Price Futures Group Senior Energy Analyst Phil Flynn
“The supply chain issues, obviously, are going to keep trucks on the road,” Flynn told Transport Topics. “The demand is going to continue to be tight. And we think that OPEC is going to have a hard time raising productions and keeping prices shut down. So our expectation is that the market is going to be undersupplied.”
Flynn added that the national weather may help counter the expected rise. While December is forecast to be colder than usual, milder temperatures are likely to follow. That could temper some of the price increases as it would alleviate additional demand from heating. But even with that, he expects prices to still go up.
“Many factors have contributed to what we’ve seen recently with diesel prices, but it all boils down to Economics 101,” said Riley Larson, general manager of JMS Transportation Inc. “Low supply and high demand translate to the price going up. Here at JMS, we are hopeful things will fall into place to lower the cost of diesel, but we know high prices are likely to stay for the foreseeable future.
“With that in mind, we will continue to utilize our fuel discounts, incentivize lower idle times and ensure our drivers are safely operating well-maintained equipment.”
Crude oil can help indicate the trajectory of fuel prices since gasoline and diesel are refined from it. The ICE Brent Crude index showed that the cost of crude had been rising through much of the year but started flattening out Oct. 26. It then fell from $82.25 on Nov. 24 to $69.67 on Dec. 2, reflecting recent declines in diesel and gasoline prices. Since then, it rose to $75.75 as of Dec. 8.
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