Diesel drops as demand falls

Nov. 1, 2001
Although international unrest that involves oil-producing regions around the Middle East usually drives fuel prices higher, diesel and other petroleum products have experienced a sharp decline in price since the terrorist attacks and U.S. retaliatory strikes in Afghanistan. While lower fuel costs are generally good news, in this case lower prices signal a slowdown in worldwide business activity, according

Although international unrest that involves oil-producing regions around the Middle East usually drives fuel prices higher, diesel and other petroleum products have experienced a sharp decline in price since the terrorist attacks and U.S. retaliatory strikes in Afghanistan. While lower fuel costs are generally good news, in this case lower prices signal a slowdown in worldwide business activity, according to observers.

With crude oil trading at $22 a barrel, the Dept. of Energy reported a 17.4¢/gal. drop in the national average price of diesel between September 17 and October 17. Retail gasoline prices dropped 20.6¢/gal. over the same period.

“It's lack of demand, both domestic and worldwide,” says economist Martin Labbe. With predictions of milder temperatures this winter, Labbe expects fuel prices to remain stable until the end of the year, and then increase slightly in the first quarter of 2002.

“OPEC will adjust (crude oil) production because they want to get it up to $28 a barrel,” he says. Although oil producers in the cartel may not be able to drive crude prices to that level, Labbe also expects to see an increase in demand starting with the New Year. “We expect (fuel) prices to pick up slightly going into the first quarter because that's when we expect to see the upturn in the economy become noticeable. You can't have interest rates where they are right now and pump $100-billion into the economy and not see some (positive) impact.”

About the Author

Jim Mele

Jim Mele is a former longtime editor-in-chief of FleetOwner. He joined the magazine in 1986 and served as chief editor from 1999 to 2017. 

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!

Sponsored Recommendations

What challenges are top of mind for fleet professionals in 2025? Get exclusive insights from the 2025 Fleet Trends Survey and discover where the industry is headed next.
The most successful fleets accomplish more than delivering freight. To accomplish this, fleets need a fuel that’s reliable, more economical and more sustainable. That fuel is ...
Are your KPIs driving real fleet improvement? Learn how to set smarter, data-driven benchmarks, track success like top-performing fleets, and apply proven strategies to optimize...
Learn how eets can enhance truck utilization and minimize safety incidents using business intelligence and AI. Delve into innovative practices, technology integration and real...