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Diesel fuel price falls below US$2

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Hydrocarbon Engineering,

The EIA's weekly survey of diesel prices shows that the US average retail price for on highway diesel fuel was US$1.98/gal. on 15 February, falling below US$2/gal. for the first time since 14 February 2005. The US average retail diesel price had last approached, but not gone below, the US$2 mark in early 2009. Falling diesel prices reflect both decreasing crude oil prices and increasing inventories of crude oil and refined products worldwide.

US average regular retail gasoline prices moved below the US$2/gal 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 US$0.06/gal. 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 US$0.50/gal., while the range for gasoline was just over US$1/gal. 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 US$0.32/gal. while gasoline price spreads averaged US$0.57/gal.

EIA surveys are a statistically representative sample of 403 retail truck stops and service stations across the contiguous US each week for on highway diesel prices. Stations are surveyed each Monday morning and report their self serve cash only prices, including all taxes, as of 8:00 a.m. local time. Survey results are reported in the Gasoline and Diesel Fuel Update later that day, one of the quickest turnaround times of any government survey.

As discussed in the February 'Short Term Energy Outlook' released earlier in February, the EIA expects diesel prices to remain relatively low throughout 2016 and 2017, averaging US$2.22/gal and US$2.58/gal, respectively.

Adapted from press release by Francesca Brindle

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