Average diesel fuel price back below mid-grade gasoline nationwide
Since the second half of 2007, the price of diesel in the U.S. has climbed from its historic level of selling at or below the price of regular gas to a point 15-to-20 percent higher than premium for much of 2008. For automakers who have been planning on introducing new 50-state legal diesel vehicles in 2008-09 – as well as drivers looking forward to buying them – this has been a big problem. The price differential ate up much of the operating cost savings that many pricier diesel vehicles were still able to provide thanks to their greater efficiency. Even as gas prices dropped from their highs of $4 per gallon last summer to less than $2, diesel remained stubbornly expensive.
That situation has finally changed in recent weeks, though. On a trip to northern Michigan a couple of weeks ago, we started seeing stations actually selling diesel for less than regular gas for the first time in two years. That same scenario has now migrated to the Ann Arbor area, where we shot the sign to the right recently.
Nationwide, diesel is now averaging just under mid-grade gas at $2.023, while regular is at $1.910. In fact, according to the Energy Information Agency, the average price of diesel has plunged over 20 cents per gallon in the last six weeks, while the price of the various grades of gasoline has more-or-less held steady, keeping prices within one or two cents. Only time will tell if this is part of a larger trend or just a temporary dip.
[Source: Energy Information Agency]
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Reader Comments (Page 1 of 2)
MajorGeek 11:42AM (3/23/2009)
Just in time for spring.... wait for it....
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montoym 6:13PM (3/23/2009)
Not sure which way you are expecting prices to go with that statement. But, I'll add in my thoughts.
Winter is often when diesel prices spike due to the competing demand from home heating oil(which is a very similar product). We saw that this past winter when diesel prices stayed relatively higher than gas prices, while gasoline plummeted. Don't get it wrong, diesel fell as well, just not as quickly as gasoline did. Difference is, diesel is still falling while gasoline is going back up again.
Summer time, usually sees gasoline prices climbing due to increased travel from consumers(thus increasing demand). Diesel stays fairly consistent since the large majority of its demand is steady year-round(except for winter as stated above). The majority of diesel is used by companies which move freight around the country as opposed to consumers whose driving habits change throughout the year. All year-round, those companies still have to move freight, it's not as though they wait for summer.
So, my prediction, I fully expect diesel to stay competitive with gasoline for the foreseeable future. I also don't expect fuel prices to repeat last year's dramatic climb either. Highest prices I expect to see this year will still be under $3.00/gal. This of course, is barring any dramatic, global events in which case my opinion may change. It also ignores short-term local prices such as the price spikes that often occur due to natural disasters and such.
MajorGeek 7:32PM (3/23/2009)
Gas was up the last 2 days. Check the news.
montoym 8:01PM (3/23/2009)
So, again, I find myself confused by your comment.
- "Gas was up the last 2 days." -
OK, so are you saying it will keep going up? Also, what do you think of diesel prices since that's the topic of this whole post really? Do you think diesel will continue to remain similarly priced to Mid-Grade? Why the vague posts?
Papi L-Gee 11:04PM (3/23/2009)
A few days ago I noticed that the price of diesel was coming back down to normal, at least near where I live..
It does depend a lot on geography, though. Around and in DC, diesel still way outprices premium.
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Farris 11:44AM (3/23/2009)
Meanwhile, in my area it's been going up.
I left on a spring break road-trip on Wednesday morning and filled up for 2.29 a gallon. Came back into town late Friday and had to fill up again at 2.39.
RUG went from 2.11 to 2.09 in the same time frame. :-(
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Paul P. 11:46AM (3/23/2009)
I'm hoping it goes back down to below the price of regular gasoline and stays there. Then we might get a few more diesel options stateside.
Right now there just aren't that many for those of us that enjoy diesels. Which, is kind of annoying when the rest of the world gets them.
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wayne 12:02PM (3/23/2009)
When diesel was selling for $4.50 or more last summer, prices at the grocery store rose. Some said the cost of oil based agricultural products were rising was the reason, others said they had to compensate truck drivers with more money. Some say both. Whatever the case, I'm glad that diesel is back where it should be... I just wish consumer products and groceries would reflect the cheaper cost of fuel by lowering back their prices to where they should be.
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Gregg 12:07PM (3/23/2009)
In my little WI town, diesel has been cheapest for weeks (today 1.96 to 1.99, though I paid only 1.86 last week). In fact, diesel is 13 to 15 cents cheaper than it is in other stations heading either way on the interstate (toward Minneapolis or Chicago). I drive 140 miles to work on Monday morning, and it amazes me that in that stretch, diesel now varies from 1.96 to 2.15 and RUG from 1.85 (even after the latest increases) to 2.07. Wish someone could explain the vagaries of fuel prices, but at least it is all far cheaper this year than last. And ironic that just as all the US manufacturers have cancelled or postponed adding diesels to their lineups, the price of the fuel plummets. I was doing ok at 5.00/gallon at the worst point last year, because I was averaging 51 mpg. Now it almost feels like I am driving free.
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Dorseto 12:22PM (3/23/2009)
I thought it was against the merchant's agreement to charge more for credit card transactions than cash.
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Kumar 12:59PM (3/23/2009)
It might depend on the State of the gas station.
Businesses have to pay a percentage (3% usually) for the privilege of each credit card transaction. It think it's around 1% for debit card transactions.
So when gas was sky high and people weren't buying anything from inside the stores, operators started to look elsewhere for income. I think most only get X cents per gallon, not a percentage, so they like low gas prices as much as we do, since we have more money to spend on the money-makers, the stuff inside the store.
Mike Homeniuk 12:34PM (3/23/2009)
As diesel is cheaper to manufacture than gasoline, it's always been a mystery to my why it costs more at the pump. (couldn't be oil company greed, could it)
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rsfourever 12:48PM (3/23/2009)
because diesel is taxed more in the US
Aprime 4:06PM (3/23/2009)
There's also two formulas, thanks to California.
montoym 6:33PM (3/23/2009)
Federal fuel taxes do favor gasoline, but only slightly. Federal taxes on Diesel are only 6cents/gal more than gasoline(18.4 cents vs. 24.4 cents). State taxes may change those figures a bit, but many states tax diesel and gas the same, and those that don't are still within the 6cent/gal. spread that the Feds have. FL and VT seem to be the outcasts since they tax diesel higher by 12.7 and 8.5cents respectively.
http://www.gaspricewatch.com/usgastaxes.asp
Secondly, there are not two different blends of diesel fuel. ULSD is used in the vast majority of stations across the country(at least 80% since June 1, 2006). There are still some which sell non-ULSD diesel, but they will be gone by Dec. 1, 2010 when all stations will be required to sell only ULSD.
This link will show you what I mean, http://tonto.eia.doe.gov/dnav/pet/pet_pri_gnd_dcus_nus_w.htm
Note how many different listings there are for gasoline(even despite the 3 different octane levels). On the other hand, count how many listings are for diesel. Note also that they only track pricing for ULSD since Low-Sulfur Diesel is sold at so few stations anymore. There is no CA blend of diesel fuel, they are the same across the country.
Buster 12:44PM (3/23/2009)
A few weeks ago I made a trip from Columbus, Ohio to Kansas City, KS. I am seriously considering a jetta diesel as my next car so I have been closely watching diesel prices. In Ohio the price was about .10 more than regular gas. Somewhere in Indiana I remember the price being .40 more than regular and when I finally got to Kansas City diesel and regular gas were the same price. I couldn't believe the large swing in prices. Hopefully these lower prices are here to stay.
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jhjacobson43 1:14PM (3/23/2009)
Cost = Supply/Demand.
Diesel is "cracked" via a separate process, not taken off the same tower as gasoline. When the U.S. economy is humming along (read roads even more filled w/18 wheelers) and consumption is high(er), supply is very close to demand and prices are high.
Now the country is in a slow down mode and there are fewer diesel consumers using less diesel...hence, lower prices.
As to what will happen, who knows. Fuel prices typically go up in the spring for summer, but the U.S. economy isn't likely to recover for some time, so...possibly not so much this year. Lower priced fuel is one of the few bright spots in this otherwise dismal economy. Imagine $5/gallon fuel today.
Perhaps the oil companies will adjust production downward, keeping prices higher, or perhaps they will do the opposite in order to stimulate the trucking (and all other diesel consumers) to ramp up their driving and therefore consumption. In any event we shouldn't be very optimistic diesel prices will remain lower than gasoline. Personally, I like diesel and would like to see more diesel powered vehicles for the masses.
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Farris 1:39PM (3/23/2009)
"Diesel is "cracked" via a separate process, not taken off the same tower as gasoline. When the U.S. economy is humming along (read roads even more filled w/18 wheelers) and consumption is high(er), supply is very close to demand and prices are high."
How does that make sense for the time from about 2002 to 2006? The economy was booming and prices were lower than an ant's behind. Prices started to skyrocket in late 2007/early 2008 which coincided with the beginning of the economic collapse.
Frank 2:13PM (3/23/2009)
The switch to an ultra-low sulpher formulation probably had more to do with relatively high diesel prices in 2007/08.
Farris 2:26PM (3/23/2009)
Good point Frank. I completely spaced the move to ULSD.