By Brian L. Milne, Refined Fuels Editor for DTN
In less than four months, the national average price for diesel fuel sold at retail outlets went from rapidly marching towards $5 per gallon to now falling below $3 per gallon, with the Department of Energy’s statistical arm, the Energy Information Administration (EIA), reporting a nearly 15-cent slide in the average during the first week of November to $2.94 gallon.
The national average has not fallen below $3 per gallon since Sept. 17, 2007.
The retail average posted an all-time record high on July 14 at $4.764 per gallon, tumbling $1.824 or 38.3% since the summer record. The EIA now expects diesel fuel prices nationally to average $2.73 a gallon in 2009, revising their projection $1.18 lower from the $3.91 a gallon forecasted in October.
A sharp contraction in consumption, with diesel demand forecasted to remain under pressure throughout 2009 because of a shrinking Gross Domestic Product, along with falling crude oil prices triggered the lower price outlook. Diesel fuel moves the majority of goods in the U.S., with a weak economy limiting the demand for hauling freight.
Last week, the U.S. Department of Transportation’s Bureau of Transportation Statistics said the Freight Transportation Services Index fell to a four-year low in September, with the index measuring the monthly change in output of services provided by the for-hire transportation industries.
Wholesale diesel prices are below $2 per gallon in most major metropolitan regions across the country, in the mid-$1.70s in California and the Pacific Southwest, and primarily ranging in the upper $1.80s to mid $1.90s in most other markets.
Wholesale diesel remains above $2 per gallon in the Northeast, Florida, Utah and western Texas. The wholesale market across the country was down sharply last week, which will continue to apply downside price pressure for retail diesel fuel prices this week.
About the Author:
Brian L. Milne is the Refined Fuels Editor for DTN—a leading business-to-business provider of real-time commodity information services. Milne has been focused on the energy industry for nearly 14 years as an analyst, journalist and editor. He can be reached at [email protected].