One sees a lot of strange sights on a semi-truck drive from the Texas Gulf to Billings, but perhaps none more unusual than the current posted price of diesel on truck stop reader boards.
For the first time in perhaps 14 years, diesel fuel in the United States is priced lower than regular gasoline. Diesel was as much as 16 cents a gallon less at the Lockwood Town Pump, where trucker Victor Davis thought it possible that the last time diesel was the cheapest fuel, George Bush was president — the first George Bush.
“It was probably in ’90, ’92,” Davis said, squeezing down on the pump handle until sales meter hit 300 gallons. “Maybe ’93. It’s been a long, long time. It shouldn’t be more expensive than gasoline; it’s a byproduct.”
The U.S. Department of Energy reports that when the price of diesel dipped 2 cents a gallon below regular gasoline in July, it was the first time since 2004 that diesel was the cheapest fuel at the pump.
Prices have been falling steadily since early July from an average of $2.83 a gallon July 7 to $2.61 a gallon last week, according to the U.S. Department of Energy. The last time diesel was at the current average price was Aug. 10, 2009, according to Federal Reserve data.
The reasons for the declining prices are many, though oversupply is the root cause. Diesel and gasoline are both abundant now, said John Felmy, American Petroleum Institute economist.
“We’ve got a record supply for both products, but demand for diesel is lower,” Felmy told The Gazette. “A lot of it has to do with weak demand from the oil and gas sector, in terms of the slowdown there. There were a lot of trucks hauling water and sand and steel” to oil wells during the Bakken boom years.
Oil drilling activity has fallen off dramatically. In North Dakota, the rig count Aug. 14 was 69, according to Baker Hughes. On Aug. 15 last year, there were 185 active drilling rigs in North Dakota. The decline means fewer trucks are servicing wells. Montana has one active drilling rig currently, down from eight for the same time last year.
Global demand for diesel is also down and contributing to the fuel’s price drop, said Ronna Alexander, state director for the Montana Petroleum Marketers and Convenience Store Association.
“There is a glut of diesel right now, and it’s just kind of one of those things that happens,” Alexander said. “Everyone was overproducing diesel because there was such a demand for it. Now, we’re not exporting as much as we were last year to places like China, which is using the most diesel of anybody.”
This article was written by Tom Lutey from Billings Gazette, Mont. and was legally licensed through the NewsCred publisher network.