Price of diesel remains near all-time high despite gas prices falling

Truck driver fueling his vehicle with diesel fuel.
Truck driver fueling his vehicle with diesel fuel. Photo credit Getty Images

Fuel costs continue to fluctuate, and while the average price for a gallon of gas is down from its all-time high in June, the price of diesel fuel has recently shot up.

According to the fuel monitoring site AAA, the average cost for a gallon of diesel fuel in the United States is $5.362. While it’s down from where it was in June, at $5.816, it’s still well above the cost it was a year ago, $3.642.

The cost of diesel directly correlates to the cost of nearly all goods and services, being that it fuels trucks, trains, barges, tractors, and construction equipment.

Global head of energy analysis at the Oil Price Information Service, Tom Kloza, shared with The New York Times just how dangerous it is to have the cost of diesel remain so high for so long.

“The economic impact is insidious because everything moves across the country powered by diesel,” Kloza said. “It’s an inflation accelerant, and the consumer ultimately has to pay for it.”

The rise in gas prices sparked outrage across the country, with politicians flocking to find solutions, but the same hasn’t been done for diesel because most of the cars in the US run on gasoline.

The cost of gasoline and diesel are tied to the price of oil, which is set on the global market. The prices for each skyrocketed following Russia’s invasion of Ukraine in February and haven’t fallen back to pre-invasion prices yet. Even still, they have diverged in the current prices.

Since last year, the average cost for a gallon of diesel fuel has increased by 40%, while the price for gas is up 11%.

Part of the reason for diesel maintaining its high prices is due to there not being as much of it in the world. Oil analysts said there were simply not enough refineries to produce the demand for the fuel, and the issue was exacerbated after Russian oil was cut off from countries condemning its invasion.

Currently, diesel inventories are the lowest they've been since 1982, when data on fuel was first reported by the government, according to the Times.

Even though the situation is expected to get worse, with the European Union planning to impose sanctions on Russia in February, possibly causing havoc on the diesel business, there is still some hope that prices could start to ease.

According to the report from the Times, China could begin exporting more barrels of diesel worldwide after its exports rose from 200,000 barrels a day in August to 430,000 barrels a day in September. ESAI Energy has estimated that the country has the capacity to sell more.

Another factor that could see prices fall is a global recession next year. Richard Joswick, the head of global oil analysis for S&P Global Platts, shared with the Times that a global recession would cut demand and, in turn, drop prices.

“A deep recession would certainly cut into diesel demand,” Joswick said. “We don’t forecast a recession, but that is certainly a possibility.”

Featured Image Photo Credit: Getty Images