Diesel prices drop to lowest levels in decade

While most motorists are focused on the tumbling price of unleaded gasoline, what is going unnoticed is diesel prices that have plummeted to their lowest levels since 2005.

On Friday, the national average price for diesel fell for the 81st day in a row to hit $2.06 a gallon — a whopping 43 cent per-gallon decline, according the AAA National Fuel Gauge. The price is 21 cents cheaper than a month ago and 76 cents lower than a year ago, the agency reported.

And at a time of year when gasoline and diesel prices are usually the farthest apart, the national average of gasoline Friday was $1.81. Gasoline dropped 40 cents during the same time period, but not on consecutive days, AAA reported. Unleaded was selling for $2.04 a year ago.

And if that sticker shock is not enough, analysts say diesel has room to drop even more and possibly go below the price of unleaded for an extended time. The last time it did that was 2009.

Warmer temperatures in the eastern United States, lower demand for fuel during the winter driving season, and weaker economies in China and Europe all are contributing to push down prices.

“The diesel supply is so abundant they are running out of places to put it,” said Michael Green, a spokesman for AAA in Washington. “There is a glut of diesel around the world right now. That is the main reason prices are in a state of free fall right now.”

Patrick DeHaan, a senior petroleum analyst with GasBuddy in Chicago, expects diesel prices to keep going down. While they might rise a little in the spring, gasoline will go up more, he said.

More than 55 percent of diesel stations across the country already are under $2 a gallon, and almost 10 percent are below $1.75, DeHaan said. GasBuddy’s forecast calls for lower prices on diesel than gasoline for this year, something that hasn’t happened at least since 2007, he said.

“Go get excited and get one of those big dualie pickups,” DeHaan said. “It has been a long time since diesel has been that cheap.”

Jennifer Drez of Fort Worth, who drives a diesel sport utility vehicle, has noticed a drop in diesel, which is good news since she schleps kids around town and makes deliveries of her series of children’s books, including Goodnight Cowtown.

“The extracurricular activities and sports schedules of three sons means that I am driving all over Fort Worth much of the day, and I find myself having to fill up quite often,” Drez said. “It would be impossible not to notice how the cost of diesel has declined over the past year.”

Unlike gasoline, diesel also is linked more closely to the weather and the agricultural seasons.

Typically, this is the time of year diesel prices are higher because refineries are concentrating on making heating oil for homes in the Midwest and Northeast. Concentrating on heating oil cuts down on the diesel supply.

While folks this week on the East Coast are digging out from an historic winter snow storm, earlier this month the U.S. National Oceanic and Atmospheric Administration and NASA said that 2015 was the warmest year since record keeping began in 1880.

“It’s been colder the last week, but that’s not going to make much of a difference,” Green said.

DeHaan agreed, saying the warmer winter weather “is reverberating across the country.”

“A year ago refineries couldn’t produce enough of it,” DeHaan said. “This is the peak demand season for diesel, and now we’re looking at the most common price is $1.99.”

This story was originally published January 29, 2016 at 4:18 PM with the headline "Diesel prices drop to lowest levels in decade."