The national average price for a gallon of diesel increased 0.5 cents last week to set a new record high of $2.249, the Energy Information Administration said. This marks a 26.6-cent increase over the course of the eighth consecutive week of price hikes.
Prices in all regions went up, but in the Central Atlantic and the oil-rich Gulf Coast regions costs held the steadiest, as they posted only a 0.2-cent gain to $2.36 and $2.182, respectively. The Gulf Coast also holds the crown for the least expensive region in which to fill up. California holds two dubious honors for the largest price hike and most expensive region for diesel, after a 3-cent jump to $2.512.
Cold weather coupled with refinery maintenance throughout February and March kept diesel prices high, according to Jacob Bournazian, EIA economist. Since heating oil is derived from distillates, the same petroleum product that is processed into diesel fuel, lingering winter weather tightened diesel supply.
Crude oil prices, which accounts for about half of the total retail price of diesel, remain in the mid-$50s level.
“A strong pace in worldwide demand [for petroleum] has created that kind of marketplace where crude oil has been gradually escalating in cost over the last 24 months,” Bournazian told Fleet Owner. “OPEC has made public statements that they want to use $50 as a benchmark for their oil. We don’t expect it to fall in the high $40s as a result of their position.”
Over the next few weeks, a drop off in heating oil demand will keep diesel prices relatively stable. However, don’t expect any relief in diesel prices.
“You may see diesel creep up another two to three cents another three weeks before there’s a fallback on [distillate] demand in April,” Bournazian said. “The low-sulfur [distillates] will be strictly used for transportation fuel and that will give the industry some breathing room to rebuild inventory over the summer.”
