After four consecutive weeks of rising diesel prices, the U.S. Energy Information Administration (EIA) noted that costs dipped across the country. Currently, the U.S. on-highway diesel fuel price average is $3.826 per gallon according to the agency, which is 3 cents less than this time last week.
Prices across the country did not change much since last week, with cost shifts limited to less than a cent to 5 cents in total. The only places diesel prices rose were in New England, where prices rose less than a cent to $4.109, and 1 cent along the West Coast without California, which reached $4.030.
Meanwhile, prices dropped less than a cent along the West Coast overall to $4.450 per gallon and fell 2 cents in California and on the East Coast. California’s diesel prices averaged out to $4.932 and the East Coast’s is down to $3.908 per gallon. The Midwest saw the largest price dip of 5 cents to $3.745, while prices dropped 4 cents along the Gulf Coast (to $3.551 per gallon) and in the Rocky Mountain region (to $3.750). But the Gulf Coast is still the cheapest place to buy diesel fuel at $3.551 per gallon while California is the most expensive at $4.932.
In comparison, the AAA motor club‘s current diesel average is $3.858 per gallon, roughly 3 cents more expensive than the EIA’s reckoning. This figure is also 1 cent more expensive than last week’s average of $3.844 and equitable to prices from this time last year.
While regional diesel prices shifted down, the EIA’s Short-Term Energy Outlook (STEO) found that Brent crude oil prices (which encompass 50% of the cost of diesel) will average at $89 per barrel in the second half of 2024, up from $84 per barrel from the first half of the year. According to the report, this could be due to global oil inventories decreasing by .5 million barrels per day in the first half of 2024, with the global inventory expected to drop another .7 million barrels per day in the second half of 2024 because of OPEC+ production cuts.
Additionally, the rise in crude oil prices could be attributed to the international need for shipping fuel, said Matt Muenster, chief economist at Breakthrough.
“[Fuel is] being stretched at the moment, with more freight heading around the Cape of Good Hope in Africa because it's being rerouted due to geopolitical conflict in the Red Sea,” Muenster noted. “And ultimately, that's impacting the amount of freight that can move through the Suez Canal, so those vessel voyage times are stretched, and fuel consumption increases with it. So those are a few of the factors that will put upward price pressure onto the barrel of crude oil at this time.”
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However, the chief economist doubted that this will last, especially as refineries tend to ramp up gas and diesel production during the summer before the season for peak freight demand.
“Usually, the summer months are an opportunity for diesel stocks to build, creating some downward price pressure on diesel premiums,” Muenster explained.
This could help explain why the STEO anticipates that monthly retail diesel prices will remain at or just below the annual average before creeping up into 2025.
Gasoline prices mixed, overall demand down
For gasoline, the EIA found that the national average for prices went up less than a cent last week, reaching $3.496 per gallon. This price is 6 cents lower than this time last year, and prices across the country varied less than a cent up to 5 cents in comparison to last week.
Prices dropped 4 cents in the Rocky Mountains to $3.386 per gallon, 4 cents in California to $4.487, and 3 cents in the West Coast overall to $4.191. But prices rose 1 cent along the East Coast to $3.466, less than a cent in the Midwest to $3.369, and up 5 cents on the Gulf Coast to $3.110. Even so, the Gulf Coast is still the cheapest place to buy gas while California remains the most expensive.
The AAA’s gas average is higher than the EIA’s at this time at $3.521 per gallon, which is up 2 cents from last week. But it is 4 cents lower than the motor club’s prices from last year at $3.566. The club also noted that the country was lucky to see the prices it did, especially given the recent holiday weekend and weather events.
“The damage from Beryl caused limited damage to Gulf Coast energy facilities,” said Andrew Gross, AAA spokesperson. “And while a record 60 million travelers were forecast to hit the highways for the July 4th holiday, the overall demand number for gasoline dropped. That is a rare feat for a holiday week and may point to a change in demand trends.”
This article was originally published on FleetOwner.com.
