On-highway diesel prices appear to have leveled off, based on the latest numbers from the Department of Energy, which show the national average dropping slightly over the past two weeks.
But with prices in the Northeast still well over $6 per gallon after inventories of diesel in the region dropped to record lows, the White House is considering an emergency declaration allowing the administration to release diesel from the Northeast Home Heating Oil Reserve, reports CNN. The reserve is rarely tapped; it was last used after Superstorm Sandy a decade ago.
As of May 23, the national average price of diesel was $5.57 per gallon, down 4.2 cents from a week ago. That followed a 1-cent drop the previous week. However, prices are still $2.32 higher than they were a year ago.
Prices dropped in every region tracked by the DOE’s Energy Information Administration this past week except for the Rocky Mountain and California region, but the New England region average is still $3.22 higher than a year ago.
The East Coast average was down nearly 4 cents per gallon, 6 cents in New England. Prices in New England and the Central Atlantic, however, are still well over $6 per gallon, at $6.37 and $6.33, respectively.
Why Are Diesel Prices so High?
There are a multitude of reasons for the high diesel prices, but the biggest is a shortage of refining capacity to turn crude oil into gasoline, diesel, jet fuel and other products.
Multiple refineries in the U.S. and Canada have been retired in recent years. Energy demand rebounded from a pandemic-driven crash. Soaring jet fuel prices mean the refineries that remain have more incentive to make jet fuel than diesel.
And the war in Ukraine and sanctions against Russia have scrambled the global oil market even more. On top of that, the U.S. is exporting more diesel just as demand has increased here —more than 1 million gallons of diesel per day are being sent to Latin American nations and Europe.
The good news is that distillate stocks ticked upward last week by 1.2 million barrels, according to EIA’s May 18 report, but that still puts them down 26.8 million from a year ago.
Patrick DeHaan with Gas Buddy said on Twitter Monday that Northeast diesel prices “should begin to cool noticeably in the days ahead, but volatility and price shocks could happen anytime.”
Sky high diesel prices in the Northeast should begin to cool noticeably in the days ahead, but volatility and price shocks could happen anytime. The decline could amount to a fall of 35-85c/gal over the next few weeks if nothing changes.— Patrick De Haan ⛽️📊 (@GasBuddyGuy) May 23, 2022