If you’re filling a diesel pusher or “oil burner” pickup, you’ve seen the prices rise. It’s not your imagination. Just in the last week, across the U.S. prices for diesel have gone up nearly another nickel—4.8 cents, to be precise. The average price around the country is now $4.54. Why are diesel prices rising, and where will it end?
Eight weeks of diesel increases
The unhappy news we report comes from the federal Energy Information Administration, released last Monday, September 11. This is the eighth straight week diesel has jumped, now up 73.8 cents. The last time we saw this oily fuel drop was back on July 10. And this week, the increase was pretty much nationwide. Unless you happen to live in one of the Atlantic states, you’ve paid more. But in the lower Atlantic region, prices actually dropped two-tenths of a cent. A look at the EIA-provided chart shows where the most pain at the pump can be found. The only “good news” is that a gallon of diesel sets you back about 50 cents less than at this time last year.
Field day for refiners
But the burning question remains: Why are diesel prices rising? Diesel prices have skyrocketed when compared to the price of crude oil, so we can’t blame the oil-producing nations for much of this. However, oil refiners are having a field day. The industry expression “crack spread” compares how much a refinery pays for crude oil to how much it sells its final product. The crack spread for making diesel from U.S. crude, based on projections for this month, is $50 a barrel. Back at the end of April, that spread was just $25, a doubling of their money.
Futures traders anticipate shortages
Not only are U.S. oil refiners making hay, fuel futures traders are pushing up the price, as many of them think that diesel shortages could be a reality, provided the U.S. economy dodges a recession later this year. Why shortages? Even though manufacturing and product delivery (both requiring diesel) have fallen off since the middle of last year, the actual amount of diesel fuel has not grown. The country’s inventory of petroleum distillates are at their lowest level since 2000. But the U.S. isn’t alone in this “not enough food in the pantry” situation. The phenomenon seems to be worldwide. In Europe, the stock of distillates is down 8% over a 10-year average.
Oil refinery practices are adding to the shortfall, and to the “why are diesel prices rising” question. Refineries in the states are pushing out almost as much product as they can; they’re also pressured to produce more gasoline. Why? Gas inventories are also down. While industry watchers say refiners could pump through another 200- to 300-thousand barrels a day, what comes out the other end won’t help much. It would translate to somewhere between 60- to 120-thousand more barrels of diesel per day—a proverbial “drop in the bucket” of demand.
What’s it all mean for diesel-consuming RVers? If you’re planning a trip, tack on more money for fuel costs. This might be a good time to take that fall trip you’ve anticipated, or go south for the winter a bit earlier than you may have planned.
##RVT1122b
Nice job. I can give you the name of a few people at the U. S. Energy Information Administration and elsewhere in the Department of Energy if you like. This with the point of your understanding getting better, not that it’s bad now.
As some think or feel, this is not political. It is big oil profits…ONLY!
They are publicly traded and have a fiduciary responsibility to the share holders to generate the most profit long and short term. Small oil on the other hand sells the family farm crude to big oil.
If it’s not political, why are gas prices or crude oil as a commodity so vastly different during differing administrations?
It’s a real question, I hope you will answer it. I ask with respect.
Do you think that American oil companies are just trying to make the administration look bad and jack up prices to hurt the population to make some point?
Has anyone noticed how many diesel semi trucks are on the roads today? They don’t burn sea water transporting all that freight cross country or locally. And as folks demand the products these trucks haul, I imagine the demand for diesel fuel will remain high because these trucks won’t be electric anytime soon.
I understand that the east coast homes burn a lot of fuel oil. Diesel is the same as #1and#2 home fuel oil. I imagine that a lot is being shipped there in preparation of winter.
Don’t worry though because out giverment is going to get rid of gas furnaces and appliances and I’d imagine oil burnering furnaces and have all electric. I think they are working on a nightime solar cell. ( being facetious)
Could environmental regulations etc imposed by governments over the past 30 years be behind the fact that in North America there has not been a refinery built in the past 50 years?
Me thinks so.
“When you have a lot of trees you have to at some point…see the forest.”
So how is the price of diesel increasing different from the increasing price of gas? Our gas prices at the pump have jumped 20 cents this week alone. I follow the commodity market and crude oil has gone up $12 a barrel since Aug 23rd. So why are you surprised by the fuel cost increase? I just read an article last week that said gas prices are 23 cents a gallon higher nationally than a year ago.
Here in southern California, it’s the same old song and dance when it comes to high gas prices. “There is a fire at one of the refineries,” or “we have to switch to the winter blend”. I would really like to know why we need a winter blend in southern California. We have no winters here. Makes no sense. Be safe out there.
I agree with you Stinger 45!
This article is all over the place. Diesel is a byproduct of oil refining and is directly related to gas production. Diesel is in high demand because of transportation costs. If you have spent any time driving interstates, you will notice the massive numbers of OTR rigs transporting everything we consume all across this country.
Electric vehicles just aren’t capable of long haul transport. There is no electric vehicle that can compete with diesel engine transport.
The US can be self sustaining in fuel production but the costs are all wrapped up in this inflationary period, thanks to current government policies.
When I was a teenager in the 70’s, I was told diesel is a by-product of the gasoline refining process, the slag if you will. It would stand to reason that the availability of diesel would be consistent with the availability of gasoline, unless the demand for diesel has exceeded the demand for gasoline. Would someone with verifiable information please respond? Another possibility is the government’s push to limit diesel use due to EPA standards, which may involve additional taxation. The economic application of general “supply and demand” is also part of the equation, along with overt petroleum industry greed.
Not everything true in the 70’s holds true today. Refineries have the ability today to shift the quantities of gasoline or diesel produced from a barrel of oil. Look up “hydrocracking” if interested. Of course, there are limits to how much of any product that can be refined from a said quantity and quality of crude oil, it is just that there is some flexibility today in the amounts of either gasoline or diesel that can be refined such that when needed, the refining processes can be adjusted to increase one over the other.
Remember, we went from energy independence to energy DEPENDENCE in about two days back in 2020. Now we’re begging our enemies to pump more oil so we can buy it at higher prices.
It is too bad we want to hurt people’s wallets with choices not to help petroleum producers/refiners until there is a future viable alternative. Yes, there are some EV options becoming a reality but they are too expensive and need mileage extensions still. Probably 2-3 years away for that but why hurt Americans now by bullying oil companies?
One word sums up the purposeful destruction of the discovery, mining and use of petroleum products and an affordable price in America. PLANNED . Follow the Money.
If you are a petroleum producer in a world dead set on killing you, why would you invest in more capacity? Use the capacity you have and get premium profits for the remaining time of your refining assets. Take advantage of the fact that electric isn’t capable enough yet and the world still needs fossil fuels.