Diesel prices, which contribute to the high cost of shipping goods, are almost $2 per gallon lower than last year’s high of nearly $7 per gallon
CALIFORNIA – The drop in fuel prices seen in the last few months will finally start benefitting commercial vehicle fleets as diesel prices have started to plummet.
While gasoline prices primarily benefit, commuters, sales people and everyday drivers, diesel is a more important indicator of how fuel prices are affecting the economy. Diesel is the fuel of choice to transport goods, plow fields and pick up your trash.
In the Golden State where everything costs more, it is particularly welcome news that the cost of diesel has fallen since last summer when big rig drivers had to pay as much $8 per gallon to carry a load.
The average price of diesel reached a high of $6.88 a gallon in June 2022, raising the price of all goods that moved by truck and causing a considerable consumer backlash which contributed to the skyrocketing rate of inflation that remains.
This month, the US Energy Information Agency (EIA) says the average price for diesel fuel in California is down to $4.96 – dropping over 50 cents per gallon over the past month. That is almost $2 per gallon decline from the high last year.
Locally, diesel is selling below that average up and down the Valley including Fastrip in Farmersville for $4.89, Walmart in Fresno for $4.59 and Yokut Gas in Lemoore at $4.49 per gallon as of April 20.
Nearly all heavy duty-trucks, delivery vehicles, buses, trains, ships, boats and barges, farm, construction and heavy duty military vehicles and equipment have diesel engines. Diesel is the fuel of choice because it has 12% more energy per gallon than gasoline and has fuel properties that prolong engine life making it ideal for heavy duty vehicle applications, says the Energy Commission.
Lower energy consumption, due partly to a mild winter, has contributed to the price decline, according to industry website GasBuddy, which tracks price trends. Last spring’s record-high diesel price was $5.82 per gallon in the US- and worse in California.
The price of diesel this summer could be $2 lower than the prior year, said Patrick De Haan, GasBuddy’s head of petroleum analysis. “Coming out of winter, we’ll continue to see diesel prices decline.”
Higher interest rates have led to price declines related to lower consumption.
“Diesel’s decline has been astounding,” De Haan said. “[W]ith diesel prices down nearly $1 per gallon in the last 100 days, thanks in part due to the Fed raising interest rates, throttling back the economy, as well as Mother Nature reducing consumption through a mild winter and curbing consumption of diesel’s cousin, heating oil.”
California’s gasoline prices have been falling as well, averaging $4.82 per gallon in the past few days, according to AAA, but $5.91 a year ago. Prices peaked at $6.44 last June.
One financial commentary on April 20 said gasoline futures fell to $2.6 per gallon, the lowest in nearly five weeks, due to an unexpected inventory build and a weakened demand. According to new data from the Energy Information Administration (EIA), gas demand decreased from 8.936 million to 8.519 million barrels per day. Meanwhile, total domestic gasoline stocks rose by 1.3 million billion barrells, with markets expecting a 1.267 million draw. At the same time, WTI crude prices have been retreating from a 5-month high hit in April on fears that a globally slowing growth could dampen fuel demand. Organization of the Petroleum Exporting Countries (OPEC) announced a surprising reduction of output by 1.6 million barrels per day starting next month for the remainder of 2023.
