Diesel Prices Rise to $4.475/Gallon

Diesel National Average is up 8.6¢ a Gallon

Diesel prices continue to rise, as they gained another 8.6¢ per gallon to arrive at a $4.475 national average.  This consistent rise in pricing has been over six consecutive sessions, and now leaves prices only 64¢ away from pricing y/y.

The Energy Information Administration (EIA) is the statistical agency of the Department of Energy. It provides policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy, and its interaction with the economy and the environment. According to the EIA the last time diesel was this expensive was the first week of February.

Some analysts have further commented that, "we’re not building up any inventories, and if we get anything resembling a cold winter (and we had a warm one last year), we could have some problems.” Diesel and home heating oil are, from a molecular standpoint, essentially the same product. And a cold winter, analysts fear, could drive prices higher, especially in the Northeast and Mid-Atlantic, which still relies on heating oil to operate power plants and keep homes warm.

The Energy Information Administration is forecasting oil production to reach all-time highs of 12.8 million barrels per day this year, up by 200,000 barrels per day from its earlier forecast.  The EIA is forecasting increasing to 300,000 barrels per day to 13.1 million in 2024.

“We forecast continued growth in domestic oil production, which is bolstered by higher oil prices and higher well productivity in the near term,” EIA Administrator Joe DeCarolis said. The EIA is forecasting gasoline prices will average $3.63/gallon in 2023, which is up sharply from the initial forecast of $3.27/gallon.

An additional wildcard that has resulted in prices rising unexpectedly is the third largest refinery was shut down due to a fire.  The refinery processes 596,000 barrels of oil per day near New Orleans.  At this point Marathon Petroleum has not made an announcement on what caused the fire, nor when it will be reopened. The cause of the fire is still under investigation. It was a serious fire, as residents within a 2 mile-radius were promptly evacuated.  Prices in Diesel futures promptly spiked 5% following this news.