Diesel Fuel Prices Hit Record High

Diesel prices in California hit a record-high average of $2.764 per gallon Wednesday, reflecting the higher cost of oil and a crimp in supplies caused by an outage at a Southern California refinery.

The new statewide average is 17 cents above the average price for a gallon of regular gasoline, and is nearly 54 cents a gallon higher than the diesel pump price a year ago, according to survey data from AAA. The average cost of regular gasoline in California was $2.595 a gallon Wednesday, still a nickel below the peak reached in April.

“There are record highs all over the place,” said Paul Gonzales, spokesman for the Automobile Club of Southern California. Of the 25 California communities and regions surveyed daily by the auto club, 20 reported record highs for diesel.

The highest diesel prices were in the San Luis Obispo-Paso Robles region, where a gallon of fuel averaged $2.828, according to AAA. In Los Angeles, diesel cost an average of $2.783 a gallon. Nationally, the average price for diesel was $2.423 on Wednesday, a few cents below the U.S. record of $2.462 set July 17.

Truckers, railroads and farmers get hit hardest when diesel prices rise, but in many cases, the added cost gets passed along to consumers.

“Everything we get, we get delivered by diesel trucks,” Gonzalez said. “Even the gasoline we get comes by diesel trucks.”

A key reason for the higher diesel prices is the escalating cost of oil, which hit a new closing high of $61.89 a barrel Tuesday in New York trading. On Wednesday, the benchmark U.S. crude fell $1.03 to $60.86.

But in Southern California, a refinery problem has also been a factor, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.

A fire July 20 in part of Chevron Corp.’s El Segundo refinery forced the company to cut back production while it repaired the crude oil unit, Kloza said. Taking advantage of the unplanned downtime, Chevron said Wednesday it opted to conduct routine maintenance on another of the plant’s units.

“The refinery problem that Chevron had was very specific to diesel,” Kloza said. “You’re going to set some more records in the next couple days for sure.”

Chevron’s Rod Spackman said the crude unit outage in El Segundo “has taken some diesel production out of the market.” He would not quantify the production loss, but said repairs to the damaged unit would take another week and a half.

While Chevron continues to provide diesel fuel to its customers with contracts, Spackman said, the company has limited its so-called discretionary sales.

Those sales are chiefly to service stations and others that don’t buy Chevron-branded diesel -- a group that can include independent gas stations, farmers, fleet operators and others. The dip in available supplies has left those buyers scrambling to purchase fuel elsewhere, further boosting prices, according to the Oil Price Information Service.