The national average price for a gallon of on-highway diesel fuel rose by nearly another nickel over the past week, with a nearly 17-cent surge in California. It’s the 10th straight week of increases for the national average.
After dropping to as low as $3.77 in early July, the average retail diesel price has risen every week to the latest figure of $4.54 per gallon as of the Department of Energy’s Sept. 11 report for on-highway ultra-low-sulfur diesel.
In California, the price is closing in on $6 per gallon at $5.97. The lowest average price was reported in the Gulf Coast region at $4.21.
The average price is down nearly 50 cents per gallon compared to a year ago, and they have not yet reached last year’s high of $5.78. But if prices continue to rise, it could change dynamics in the freight market.
In its Short Term Energy Outlook published September 12, the U.S. Energy Information Administration said its current projection for the average 2023 price of diesel is $4.31; for 2024 the outlook expects the average to be $4.07. However, these numbers are about 3.5% higher than in its previous forecast.
In a session at FTR’s conference on September 12, Avery Vise, vice president of trucking for FTR, said that with diesel prices rising and flat spot rates, we may see more small motor carriers dropping out of the market.
“This is one of the big X factors here,” Vise said. “If we continue to see diesel prices rise, that could be a market-changer.”
Crude Oil Prices
Crude oil makes up nearly half of the price of a gallon of diesel, and oil futures prices continue to rise, with U.S. oil nearing $90 per barrel in trading Tuesday morning. Oil prices have risen by 31% over the past three months.
Last week, the two leading oil benchmarks, Brent crude and U.S. West Texas Intermediate (WTI), reached their highest levels since November 2022, after Saudi Arabia and Russia announced they would cut their oil production by a million barrels per day through the end of the year. The two countries are coordinating their actions with OPEC's oil production cuts, although they are not members.
In its Short Term Energy Outlook, the EIA expects the Brent crude oil price to average $93 per barrel during the fourth quarter of this year, citing an expected decline in global oil inventories in the coming months. This outlook incorporates Saudi Arabia’s September 5 announcement to continue its voluntary crude oil production cut of 1 million barrels per day through the end of this year. Previously, the voluntary cut was set to expire at the end of September.
Longer-term, the EIA said, in its forecst, "The price eases to an average of $87/barrel by the second half of 2024 because we expect global oil inventories to rise during that period."
Updated 2 pm eastern time to add Short-Term Energy Outlook information.