Diesel Hits Record as Gasoline Prices Fall
Gasoline prices eased around the country Monday, but diesel fuel broke another record as Gulf Coast refineries remained crippled by hurricane damage.
In Texas and Louisiana, eight refineries with the ability to process more than 2.1 million barrels of oil per day were still out of service, accounting for about 18% of the nation’s refining capacity, the Energy Department said.
That refinery squeeze sent the national average for diesel to a new high of $3.209 a gallon, up from the previous record of $3.197 on Friday, according to the AAA’s daily survey of fuel prices. Meanwhile, gasoline prices edged lower nationally to an average of $2.885 for a gallon of self-serve regular, down from $2.932 on Friday, the AAA said.
In California, the average price of a gallon of self-serve regular gasoline slipped to $3.001 on Monday from $3.013 on Friday, AAA said. The average diesel price fell to $3.385 a gallon from $3.413.
Fuel prices jumped after hurricanes Katrina and Rita, and diesel has continued to climb because of heavy demand and scant imports, analysts said, noting that few foreign sources produce the kind of diesel that meets American environmental standards. Although high gasoline prices are painful to motorists, expensive diesel may bring even more economic distress because the fuel is used by farmers and by the trucks and railroads that transport most of the nation’s goods.
“Diesel is still going up because the demand for diesel has been unprecedented this year. It will stay high because of the impact of the storms,” said Phil Flynn, vice president and senior analyst at Alaron Trading Corp.
Flynn said the coming winter season would place a higher demand on the production of heating oil, which, like diesel, is one of the products of crude-oil refining known as distillates.
Production of gasoline also has been hampered because of downed refineries, but its price has been able to decline because of brisk gasoline imports and a normal drop in demand at this time of year, analysts said.
“Gasoline is abundant while diesel and jet fuel supplies are still very tight,” said Tom Kloza, chief oil analyst for the Oil Price Information Service.
Dale Kindred, a long-haul truck driver based in Illinois, is fed up. He said he wanted federal price controls on fuel.
“This is putting a hammering on us in terms of what we can bear,” said Kindred, who spent $1,300 on fuel last week hauling rolled paper from Reno to Atlanta in his 1989 Western Star rig. A year ago, the same trip would have cost about $800, the 59-year-old trucker said.
“The federal government needs to take a look at this now, not two years from now when everybody is broke,” Kindred said. Fuel costs ate $43,000 of his gross income of $132,000 in 2004 and the hit will be bigger this year, he said.
Because California imports most of its oil from Alaska and produces much of its own gasoline and diesel, prices in the state were affected less by the Gulf Coast problems than fuel prices in other parts of the country were, said Marie Montgomery, spokeswoman for the Automobile Club of Southern California.
Oil futures for November delivery fell 4 cents Monday to $61.80 a barrel on the New York Mercantile Exchange. Gasoline futures fell 2.86 cents to $1.801 a gallon. Heating oil futures rose $1.17 to $1.972 a gallon, while natural gas futures fell 25.1 cents to $12.975 per million British thermal units.
