The Energy Information Administration's weekly survey of diesel prices shows that the U.S. average retail price for on-highway diesel fuel was $1.98 per gallon on February 15, falling below $2/gal for the first time since February 14, 2005. The U.S. average retail diesel price had last approached, but not gone below, the $2.00 mark in early 2009.
Falling diesel prices reflect both decreasing crude oil prices and increasing inventories of crude oil and refined products worldwide.
U.S. average regular retail gasoline prices moved below the $2/gallon mark a little over a month ago. In recent years, diesel prices have tended to be higher than gasoline prices, reflecting strong global demand for diesel, federal fuel taxes for diesel that are six cents/gallon higher than those for gasoline, and the higher production cost of ultra-low sulfur diesel.
Diesel prices tend to vary less by region than gasoline prices. In 2015, the average range among diesel prices in the five Petroleum Administration for Defense Districts (PADDs), three sub-PADDs, and California averaged just under 50 cents/gallon, while the range for gasoline was just over $1/gallon. This difference in price ranges was largely because gasoline supply chains on the West Coast were adjusting to several refinery outages in 2015 that tightened gasoline supplies and increased prices.
From 2010 to 2014, regional diesel price spreads averaged 32 cents/gal while gasoline price spreads averaged 57 cents/gallon.
As discussed in the February Short-Term Energy Outlook released last week, EIA expects diesel prices to remain relatively low throughout 2016 and 2017, averaging $2.22 and 2.58/gallon, respectively.