For the first time since May, the national average price of a gallon of diesel has topped the four-dollar mark.

Diesel is up 2.3 cents from last weeks price survey to $4.011 per gallon the Department of Energy reported on Monday. The lowest regional average price was report in the Gulf Coast states at $3.903, while California posted the highest prices in the country, averaging $4.271 statewide.

Diesel is now nearly 84 cents a gallon higher that is was a year ago.

Gasoline prices, on the other hand, dipped 6.8 cents a gallon for a nationwide average of $3.368 per gallon, the biggest weekly drop posted over the past seven weeks.

Even as price march upward, U.S. fuel demand in October rose to the highest level for the month in three years, led by gains in diesel consumption, the American Petroleum Institute said.

Total deliveries of petroleum products increased 2.5% to 19.4 million barrels a day last month from a year earlier, the API said Monday in a report. Year-to-date consumption has averaged 19.2 million barrels a day, up 0.1 percent from the same period in 2010.

"Our economy is growing modestly and the overall demand numbers support that," John Felmy, chief economist with the Washington-based API, said in the report.

Consumption of distillate fuels, a category that includes diesel and heating oil, rose 12% to 4.24 million barrels a day in October, the highest level for the month since 2006.

Demand for ultra-low sulfur diesel, the type used on highways, climbed 15% to average 3.82 million barrels a day, the report showed. Heating-oil use dropped 6.7 percent to 419,000 barrels a day.

Oil Prices Weakening

Meanwhile, oil prices fell Monday on fears that the world economy will weaken and push down demand for crude.

West Texas Intermediate oil fell 75 cents to finish at $96.92 a barrel in New York. Brent crude, which is used to price oil produced in many foreign countries, fell 74 cents to end at $106.66 a barrel in London.

The global economy is under assault from several directions. The inability of Europe to deal with its crushing debt problems is raising concerns that the region will fall into recession. Also, as long as the crisis continues, the fear remains that the world financial system could seize up if European banks and banks with ties to Europe stop lending.

When the economy slows, demand for crude oil and refined products like diesel and gasoline falls because fewer goods are produced and shipped, and people travel less.

Last Thursday, oil closed above $100 per barrel for the first time since June, finishing the trading day in New York at $102.59 a barrel.

Weekly Retail On-Highway Diesel Prices
(Dollars per gallon, including all taxes)

East Coast: 3.984
New England: 4.056
Central Atlantic: 4.100
Lower Atlantic: 3.918
Midwest: 4.010
Gulf Coast: 3.903
Rocky Mountain: 4.144
West Coast: 4.191
California: 4.271