Remember the old days when gasoline and diesel had roughly the same price? Well, it looks like things are returning toward price parity after last year when diesel often had a premium of ~75 cents. These past few weeks, US diesel production has created ample supply levels and the price has fallen toward the rising price of gasoline.
Gasoline prices have increased from a low just above $1.60 to today’s level of $1.933 per gallon. And with wholesale prices having increased another six cents today to $1.38 per gallon, gasoline appears ready to pass the $2 per gallon mark in coming days. The retail price usually balances out to be ~70-75 cents above wholesale levels.
Meanwhile, high diesel prices – largely due to strong demand from diesel vehicles in Europe and Asia pressuring the global market – sent diesel production above average. This higher production amidst low demand has sent domestic diesel/distillates storage to more than 21% above last year and way above average, as today’s Energy Information Agency Petroleum Report shows. The imminent end to the winter heating season takes some pressure off of distillate heating oil demand, moving prices lower to $2.209 per gallon today. While today’s 27.6 cent difference between diesel and gasoline is significant, it’s less than 40% of the difference last July. And the fact that gasoline demand rose 1.5% last week compared to last year while distillate demand fell 12.9%, means the difference will probably fall further.
I’m not saying parity is guaranteed in the weeks ahead because almost anything can happen in today’s volatile market. But if you are considering a more fuel efficient diesel car, you may not have to worry so much that the price premium will always be as significant as 2008′s 70+ cents per gallon. The next two weeks will be interesting to follow whether diesel and gasoline prices meet again in the $2.00-$2.10 region.
Climate Relevance: Super-efficient diesel models such as the 2009 VW Jetta TDi who beat the Toyota Prius for highway fuel efficiency (while the hybrid Prius is much more efficient in the city) are again becoming a great option for people looking to lower their greenhouse gas emissions.
Onwards in the Sustainable Energy Transition-
Tags: diesel, gas prices, gasoline, Oil, US