Diesel Prices Continue to Decline
The benchmark diesel price used for most fuel surcharges has dropped for the second consecutive week, offering relief to the trucking industry. According to data from the Department of Energy (DOE)/Energy Information Administration (EIA), diesel prices declined 5.3 cents per gallon, bringing the average to $3.582 per gallon. Combined with last week’s drop of 6.2 cents, the total decline now stands at 11.5 cents over two weeks—the most significant two-week decrease since December 2023.
This puts the current diesel price just above its lowest point of 2025, which was recorded at $3.561 per gallon on January 6. The downward trend aligns with falling oil prices, as economic concerns ripple through global markets.
What’s Behind the Diesel Price Decline?
Several factors are contributing to the ongoing drop in fuel prices:
✔ Economic Slowdown: Concerns about a potential recession are dampening demand for fuel, affecting oil and diesel markets.
✔ Lower Crude Oil Prices: Ultra-low sulfur diesel (ULSD) futures on the CME commodity exchange settled at $2.1799 per gallon, marking their lowest point since early December.
✔ Excess Refining Capacity: U.S. refiners continue to produce large volumes of fuel, keeping supply strong.
Diesel prices are expected to continue falling, as retail fuel costs lag behind wholesale price movements. Since hitting a recent high of $2.5034 per gallon on February 20, ULSD futures have dropped 32.35 cents per gallon, meaning trucking fleets could see further cost reductions in the coming weeks.
For trucking companies, diesel expenses are one of the largest operational costs, second only to labor. Many fleets rely on fuel surcharge programs to offset rising prices, but a lower diesel price environment means direct savings for carriers and shippers alike.
Potential Risks for U.S. Refineries
While lower fuel prices are positive for consumers and trucking companies, a new trade risk looms for U.S. refiners.
Economist Philip Verleger warns that tariffs on imported energy products—a key part of President Donald Trump’s trade policy—could trigger retaliatory actions from trading partners. With U.S. refineries exporting over 3.7 million barrels per day of fuel products (including 1.3 million barrels per day of ULSD), restrictions on exports could harm refining profitability.
Key concerns for U.S. refiners include:
🔴 Retaliatory tariffs from Mexico and Europe, key importers of U.S. refined products.
🔴 A shrinking global market for U.S. refiners, as competition from the Middle East, Russia, and China intensifies.
🔴 New refineries, such as Nigeria’s massive Dangote refinery, increasing competition in the Atlantic basin.
As a result, some Gulf Coast refiners may struggle to maintain operations, especially after the recent closure of the LyondellBasel refinery, one of the oldest in the region.
Could East Coast Refineries Benefit?
Interestingly, refineries in the U.S. Northeast may see higher margins due to potential tariff-driven price spikes. Verleger points out that refineries in:
📌 Bayway, New Jersey (Phillips 66)
📌 Delaware City, Delaware (PBF Energy)
📌 Monroe Energy, Pennsylvania (Delta Airlines)
…could capitalize on rising fuel prices in the region. These refineries serve areas reliant on imported fuel, and with tariffs restricting trade, domestic refiners may gain pricing power.
However, New England diesel prices have not yet spiked, showing only a 0.6-cent drop, compared to the 5.3-cent decrease across the East Coast. If tariffs are enacted, regional price volatility may increase.
Looking Ahead
While diesel prices are dropping, potential trade conflicts and refining industry shifts could shape the market in the coming months. Trucking companies may benefit from short-term fuel savings, but long-term changes in the refinery sector could introduce new uncertainties.
Source:
https://www.freightwaves.com/news/postal-service-to-adjust-delivery-standards-for-network-efficiency
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