Diesel Drops Below $2.50
December 15, 2008
The average price of a gallon of diesel has dropped below $2.50, according to weekly figures from the U.S. Energy Information Administration.
The EIA, part of the Department of Energy, reported an average retail price of $2.422, down more than 9 cents from last week's average of $2.515 and about 89 cents less than a year ago.
The highest prices were reported in the New England region, where the average is $2.74 per gallon. The lowest were on the West Coast, at $2.303.
Meanwhile, crude oil prices surged to more than $50 a barrel early Monday on the New York Mercantile Exchange, but fell back and closed at $44.60 a barrel.
The Organization of Petroleum Exporting Countries is widely expected to cut its oil output quote when it meets on Wednesday. If the oil cartel does so, it will be its third such cut since September. According to published reports, analysts expect a cut of 1 million to 2 million barrels a day. OPEC's official daily output quota is 27.3 million barrels (excluding Iraq).
However, some people who follow the oil industry say many countries may not actually stick to the official quotas. Oil-producing countries set their budgets for next year based on higher oil numbers, so with lower oil prices, they may pump more to make up the difference. Kevin Lindemer, executive managing director for Global Insight's energy practice, says in his experience, OPEC countries "say one thing and do another" in this situation.