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    Friday, May 03, 2024

    Diesel drops below $2 for the first time since 2005

    For the first time in more than a decade, drivers who use diesel fuel can typically fill up for less than $2 a gallon.

    In its Feb. 15 update on fuel prices, the United States Energy Information Administration says the average on-highway price for diesel in the U.S. was $1.98 per gallon. EIA gives a weekly update on retail prices for both diesel and gasoline.

    This was the first time this fuel was available for under $2 a gallon since Feb. 14, 2005. At that time, the average diesel price in the U.S. was $1.99 a gallon. It approached this point in March 2009, but the average dropped only to $2.02 a gallon before rising again.

    Prices remained stable in EIA's update for Feb. 22. The report says average diesel prices were down to $1.98 per gallon on this date, while the average cost for gasoline had fallen to $1.73 a gallon.

    The EIA says decreasing crude oil prices are one factor affecting diesel prices. It says larger inventories of crude oil and refined products are also keeping prices low.

    Diesel prices are not subject to as many regional variations as gasoline. The difference among averages in the United States was just under 50 cents, while gas prices varied by slightly more than a dollar depending on the region. The EIA says refinery outages on the West Coast led to a larger difference in gas prices in 2015. Between 2010 and 2014, the price spread was more modest: 32 cents on average for diesel and 57 cents on average for gasoline.

    Gasoline is typically cheaper than diesel, with its national average falling below $2 in January. EIA says factors that make diesel a more expensive fuel include high demand on the global market, the higher cost to produce ultra-low sulfur diesel, and federal fuel taxes that are six cents more per gallon than the taxes on gasoline.

    However, the average price for diesel did dip briefly below the gasoline average last year. Starting on July 13, diesel prices averaged $2.81 while gasoline prices averaged $2.83. Diesel remained less expensive until the Aug. 31 update, when both fuels averaged $2.51.

    EIA believes diesel prices will stay relatively low for the next two years, although they are expected to climb steadily. The administration's forecast suggests that diesel prices will average $2.22 per gallon in 2016 and $2.58 per gallon in 2017. It also anticipates an increase in the monthly average from $2.13 in March to $2.81 in December 2017.

    The EIA forecast for gasoline suggests that the cost of this fuel will also rise over the next two years, with more seasonal variation. The administration suggests that average gas prices in the U.S. will peak at $2.08 during the summer of 2016, fall back to a low of $1.89 in January 2017, then hit a high of $2.36 in the summer of 2017. The predictions for the yearly average gas prices are $1.98 for 2016 and $2.21 for 2017.

    For its Gasoline and Diesel Fuel Update, the EIA collects price information from about 800 retail gas stations and 400 retail truck stops and service stations. The administration says the cost of crude oil is the primary factor driving fuel costs, followed by taxes and costs for refining, marketing, and distribution.

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