The federal government's benchmark price for an average gallon of on-highway diesel fuel closed 2015 at $2.23 a gallon, the lowest nationwide price to end a year since 2004, and nearly a $1 a gallon drop from the end of 2014, according to data published late yesterday by the Department of Energy's Energy Information Administration (EIA).
EIA, which releases weekly data at around 5 p.m. Eastern time each Monday, said yesterday's nationwide price was a near 5-cent-a-gallon drop from the prior week and slightly under 98 cents a gallon below data reported in the last week of 2014. In yesterday's report, the Gulf Coast region posted the lowest price, at $2.14 a gallon. California posted the highest price, at just under $2.61 a gallon. EIA data includes three subregions—New England, central Atlantic, and lower Atlantic—that comprise the East Coast, as well as separate prices for the West Coast—one excluding California and one for California alone.
In 2004, diesel prices closed the year at just under $1.99 a gallon, according to EIA historical data. Even in the brutal recession year of 2009, diesel prices closed at $2.73 a gallon, despite a collapse in oil prices from record highs in mid-2008 and a dramatic contraction in demand.
In late August, the American Trucking Associations (ATA), the trade group representing mostly large for-hire carriers, forecast that dramatically lower oil prices would reduce the industry's total 2015 fuel bill by $42 billion from 2014 levels. At that time, however, diesel prices stood at about $2.56 a gallon, about 33 cents a gallon higher than current levels. As a result, it is probable the industry's final 2015 fuel savings will be substantially greater than what the group predicted over the summer. ATA's prediction, which was based on EIA data and on the group's internal analysis of fuel consumption, includes fuel consumed by for-hire and private fleets across the board.
EIA said in its most recent short-term forecast on Dec. 8 that the average diesel price expected for the month—about $2.33 a gallon—would likely be the low point for at least the next 12 months. By the end of March, prices should increase to $2.61 a gallon, and hit a high of $2.78 a gallon in September before settling at around $2.75 a gallon during December 2016, EIA said at the time. The agency's next short-term outlook is scheduled for Jan. 17, at which time it will make its 2017 forecasts. Next month's forecast may also produce downward revisions, given the price declines of the past three weeks, according to Sean Hill, an EIA economist.
Hill, who accurately predicted in August a further 25- to 30-cent-a-gallon drop in diesel prices by the end of 2015, said a combination of ample supplies and mild winter weather have stifled the upward price momentum normally seen at this time of the year. Hill added, however, that "at some point winter will actually arrive, and that will start pushing diesel prices up a bit, along with slightly increasing crude oil prices giving some strength to diesel as well."
In what may be the most striking data point of all, 18 months ago the average national diesel price stood at $3.92 a gallon, according to EIA data. Since then, a surge in domestic production; a move by Saudi Arabia, the top producer of the Organization of Petroleum Exporting Countries (OPEC), to pump crude oil at full force to defend market share; and a slowing U.S. economy combined to send oil prices into free fall. Diesel lagged the declines in oil prices until the second half of 2015, at which time they began their recent sharp drop.
Futures prices for Brené North Sea crude oil, considered the benchmark for U.S. retail diesel and gasoline prices, settled yesterday at $36.62 a barrel, levels not seen for more than a decade. U.S. West Texas Intermediate (WTI) futures closed at $36.81 a barrel. Crude oil prices were at more than $100 a barrel in June 2014.
