Diesel Continues Fall; Oil Drops Due to Strengthening Dollar

May 23, 2011

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On-highway diesel prices fell by 6.4 cents nationally, an even larger decrease than last week. National average prices are once again below $4 per gallon, but just barely at $3.997.

All major regions experienced a decrease, according to Monday's weekly report from the Department of Energy. California had the biggest drop at 8.4 cents, but is still leading prices at $4.287 per gallon. The Gulf Coast was cheapest overall at $3.935.

The rather steep decline was expected, as the lag between oil price fluctuations and prices at the pump is typically about two weeks. Oil dropped sharply to below $100 early in May.

Prices at the pump will likely continue to drop as oil stays low. On Monday, crude for June delivery fell by 2.4 percent, down to $97.70 per barrel. The price decline was principally due to renewed concerns over European sovereign debt, which is strengthening the dollar compared to other currencies. A strong dollar usually helps depress oil prices, which are denominated in dollars, as it makes oil more expensive for holders of other currencies.

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