The ‘fuel that moves the economy’ hits an all-time high average price

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The national average cost for a gallon of diesel fuel hit the highest level on record this week.

 

On April 29, diesel fuel costs reached a new average all-time high of $5.16 per gallon, surpassing the previous record of $5.15 per gallon set on March 10, according to GasBuddy.

“While gasoline prices get much of the attention, diesel, which broadly is the fuel that moves the economy, has quietly surpassed its recent record high as distillate inventories, which include diesel and jet fuel, have plummeted to their lowest level in years,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “Should distillate inventories fall another five million barrels, which is less than five percent, they will be at their lowest level in nearly 20 years, compounding the problem. There’s no quick solution as the economy has seen a robust turn around, made worse by Russia’s war on Ukraine as the West fences off Russia’s oil.”

 

GasBuddy predicts that there will be no major relief in sight for truckers who are feeling squeezed at the pump:

Both diesel and gasoline prices spiked to record levels in early to mid-March, largely due to Russia’s war on Ukraine and the response via sanctions on Russian energy. The recent resurgence in diesel prices can be attributed to continued escalations in the situation and plunging inventories of oil and refined products, like diesel, along with recovering demand as goods move across the country, much of which is powered by diesel fuel in semi-trucks, trains and ships.

Diesel prices in the Northeast are likely to rise above any other region due to the loss of refining capacity from both Covid-induced shutdowns and a 2019 fire at the Philadelphia Energy Solutions refinery in 2019. Combined, these issues have caused the loss of nearly half a million barrels in refining capacity. Diesel prices are likely to remain at a substantial premium to gasoline as imbalances persist, however, refiners are likely adjusting yields to produce as much diesel and jet fuel. Economics favor production of these refined products and refiners chase the higher market value of these fuels.

According to different analysis from AAA, the highest recorded average price for a gallon of diesel was reached on Friday, April 29 at a cost of $5.180 per gallon. This marks the highest national average cost for diesel fuel since AAA began recording fuel prices in 2005.

The average price in some states is much higher than the national average. In California, Friday’s average price for a gallon of diesel is $6.394, according to AAA data.

 

“Pump prices will likely face upward pressure as oil prices remain above $100 per barrel,” AAA noted.

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