Diesel Price Falls Below $4 for First Time Since July
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The national average diesel price dropped below $4 a gallon for the first time in nearly five months after shedding 10.5 cents to $3.987, according to the Energy Information Administration data released Dec. 11.
The last time trucking’s main fuel cost less than $4 a gallon was July 24, when a 9.9-cent increase marked the start of 11 straight increases that ended Oct. 9. A gallon of diesel now costs 76.7 cents less than it did at this time in 2022.
The national average diesel price fell in all 10 regions in EIA’s weekly survey, with the Lower Atlantic, West Coast and California recording declines of 11 cents or more. New England posted the smallest price drop at 1.4 cents.
The average price for a gallon of gasoline dropped 9.5 cents to reach $3.316. That marks a 10.3-cent decline from this time a year ago.
U.S. On-Highway Diesel Fuel Prices
Oil industry analyst Phil Flynn with Price Futures Group said concerns over global instability have not materialized, and with falling demand, that means prices could be dropping for several more weeks.
“It’s been the perfect storm,” Flynn told Transport Topics. “One of the concerns early on was that the war between Hamas and Israel would disrupt supplies, and that has not happened. And there is growing global concern because of weakening demand in China and Europe.
“Part of this is seasonal in nature. Generally, around this time of year, prices have a tendency to crash. This is always the time of year where prices always fall. The question is, is this a trend, where we see prices continue to fall, or is it a bottom?”
AAA in its Dec. 13 report said the national average for unleaded gas was even lower than the EIA’s figure at $3.12 a gallon, down 9 cents since the beginning of the month and 25 cents less than it was in November. When measured against the same period in 2022, gasoline is 13 cents a gallon less expensive.
Elevated fuel prices in California, AAA said, may be camouflaging a much larger decline across the country. The auto club said nearly 60% of all gas stations are selling below $3 a gallon, and 25% are below $2.75.
Tom Kloza, the global head of analysis at the Oil Price Information Service, forecasts the nationwide average price of gasoline will slump below the 2022 low point of $3.10 a gallon and could be below $3 a gallon by Jan. 1.
“We ended the year at $3.09 in 2022, and most of those decreases came between Thanksgiving and New Year,” Kloza told TT. “Prices are actually cheaper than they were last year, because the averages are misleading, and if you don’t live in a Western state, you probably can find gasoline for $3 a gallon, or under that price.”
According to AAA, the average price in eight Western states — Alaska, Arizona, California, Hawaii, Nevada, Idaho, Oregon and Washington — is exactly $4 a gallon.
One of the major factors driving lower diesel and gasoline prices is the plunging price of oil. Oilprices.com reports that West Texas Intermediate crude, the industry’s benchmark fuel, slumped to $68.61 on Dec. 12 before rebounding by more than a dollar to just above $70 a barrel the next day. But on Nov. 29, WTI was trading at nearly $78 a barrel, and in late September, it hit $9. A year ago, WTI was trading at nearly $78.
Meanwhile, a short-term energy report from EIA forecasts the supply and the price of oil, gasoline and diesel will remain relatively stable into the early months of 2024.
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The Dec. 7 EIA report said the spot market price for a barrel of Brent crude will increase from $78 to $84 a barrel in the first half of next year. The rise will be driven in part by the recently announced OPEC+ production cuts because of slumping global demand.
On Nov. 30, the OPEC+ members pledged to cut output by more than 2.2 million barrels per day in the first quarter. Production giants Saudi Arabia and Russia said they would reduce output by 1.3 million barrels per day, and the other members would conduct voluntary reductions of nearly a million barrels daily.
EIA, in its last short-term energy forecast in November, said even with those cuts, it is significantly lowering its overall cost of Brent crude for the entire year to $83 a barrel from $93.
Meanwhile, domestic production continues to surge to record levels. The latest EIA figures on Dec. 8 show American companies pumped 13.1 million barrels of oil per day. That’s up 1 million barrels from a year ago, when post-COVID 19 production increased to 12.1 million barrels per day in mid-December 2022.
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