The national average price for a gallon of diesel took a 17.8-cent dive to $2.698 for the week ending Nov. 7, putting prices at “only” 53.5 cents more than the same period last year, according to the Energy Information Administration (EIA).
All regions posted a significant price break, but the biggest plunge occurred in the Midwest, where a gallon of diesel shed 23.6 cents, bringing it down to $2.671. New England prices held the steadiest, falling 9 cents to $2.744. The Lower Atlantic region posted the lowest prices, after a 14.5-cent drop to $2.608. At $2.907/gal., diesel fuel in the Rocky Mountain region remained the most expensive for the second week in a row, despite a 17.2-cent drop.
Between the weeks ending Oct. 23 and Nov. 7, diesel plummeted 45.9 cents. This puts prices 10.8 cents above the $2.59 pre-Katrina level posted for the week ending Aug. 28.
According to Doug MacIntyre, EIA senior oil market analyst, because retail prices “lag” the downward trend of wholesale prices, there’s the potential for another 10- to 15-cent decrease over the next few weeks. Also, U.S. refining capacity is still recovering from the effects of Hurricanes Katrina and Rita.
“At the peak [of hurricane damage], the U.S. lost a third of its refining capacity,” MacIntyre told FleetOwner. “Of that loss, we gained roughly 80% back.”
Specifically, 800,000 barrels per day of crude oil refining capacity is still offline— an improvement over the nearly 5 million lost at the height of the disasters. Operations at three refineries remain down, but as they get back online, diesel supplies will increase, MacIntyre explained.
However, stockpiles of distillate—which can be turned into heating oil or diesel—are at the lower end of the average range. This makes diesel prices vulnerable to problems such as run-ups in crude oil prices, supply disruptions or cold snaps in the heating-oil-thirsty New England region.
“That is the only issue that might keep diesel [prices] from falling significantly more,” MacIntyre said. “Right now it appears it might continue to fall for at least a few more weeks, but [the price drops] won’t be as significant as during the last two weeks.”
For more detailed information on diesel prices, go to www.fleetowner.com/diesel.xls.