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May 11, 2020 6:15 PM, EDT

Diesel Prices Show Signs of Leveling Off After Significant Declines

Close-up of diesel fuelDaniel Acker/Bloomberg News

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Recent significant declines in the U.S. retail price of diesel are starting to show signs of slowing.

Diesel dropped half a penny to $2.394 per gallon, according to the Energy Information Administration’s weekly report released May 11, from $2.399 the previous week.

Still, the trucking industry’s primary fuel is 76.6 cents less expensive than it was a year ago, and the price of diesel was down in seven of the 10 regions of the country, EIA reported.

The least expensive diesel remains in the Gulf Coast region, which is home to much of the nation’s extensive refining capacity. There, diesel increased nine-tenths of a penny to $2.178 a gallon. But in that area, diesel remains 72.7 cents less expensive than it was a year ago. California remains the most expensive location in the nation to purchase diesel at $3.182 a gallon, but that’s 95.4 cents a gallon less than a year ago.

Of all the regions, the Rocky Mountain region saw the most significant dip in price, according to EIA, declining 2.4 cents per gallon to $2.346 — 83.5 cents less expensive than it was a year ago.

Meanwhile, the agency said the average price of a gallon of gasoline in the United States rose for the second week in a row, increasing 6.2 cents to $1.851, which is still $1.015 cheaper than a year ago. In the Midwest, the price surged 17.8 cents per gallon to $1.751.

Before the coronavirus pandemic, the world used an estimated 100 million barrels of oil per day. With hundreds of millions of people not traveling and staying at home, world oil usage has fallen to about 70 million barrels per day, Oil Price Information Service analyst Tom Kloza told Transport Topics.

The industry’s benchmark West Texas Intermediate crude closed down 53 cents at $24.50 a barrel May 11, which is off more than 63% from its 52-week high of $66.65 a barrel.

Meanwhile, the Texas Railroad Commission, the agency that regulates the state’s oil industry, decided not to impose mandatory production cuts by a 2-to-1 margin, it said on its website May 5. Supporters of the proposed cuts argued it would stabilize prices at a time when the world’s oil storage facilities are nearly full, and prices have been dropping. But opponents said there was no need for the state to interfere with the marketplace as oil producers are cutting production voluntarily.

The Texas Railroad Commission has the power to limit production, dating to a law from the 1930s, but said on its website that it has not used that authority since 1972.

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Host Seth Clevenger speaks with Mike Perkins and Derrick Loo, test drivers at Peloton Technology, one of the companies at the forefront of developing truck platooning systems. Hear a snippet, above, and get the full program by going to RoadSigns.TTNews.com.

Oklahoma and North Dakota also have been debating production limits, but no action has been taken. However, on May 20, the North Dakota Industrial Commission will hold a public hearing on whether the current production of oil and natural gas at low prices is a waste of energy.

The commission is asking energy producers to weigh in on the challenges of cutting production from North Dakota’s oil-rich wells in the Bakken Shale. North Dakota is the nation’s second-leading energy-producing state behind Texas, according to EIA.

The commission also is evaluating the idea of providing financial assistance to oil producers to allow them to restart closed wells in the future. Oil output has fallen by nearly a third. As many as 5,000 wells, accounting for 300,000 barrels of oil per day, have been closed, the commission said.

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