Diesel fuel costs recently surged past a 7-year high and showed no sign of stabilizing.
The average price for a gallon of diesel hit $3.40 as September waned, a cost not experienced since 2014. Adding insult to injury, diesel prices hovered at $2.38 one year ago. Early October reporting data pegged the national average at $3.47 and climbing. Although prices dropped to $2.37 in early November 2020, they have been rising since the elections.
“Last week saw oil prices advance to their highest in seven years, with a barrel of West Texas Intermediate crude oil surpassing the critical $80-per-barrel level. The nation’s gas prices were also pushed to their highest since 2014, all on OPEC’s decision not to raise production more than it already agreed to in July,” Gas Buddy analyst Patrick De Haan reportedly said. “The OPEC decision caused an immediate reaction in oil prices, and amid what is turning into a global energy crunch, motorists are now spending over $400 million more on gasoline every single day than they were just a year ago.”
The Biden Administration does have at least one tool in its box it could leverage to slow the cost of diesel and heating oil heading into the winter. The White House could tap the country’s crude oil reserves, a move used by predecessors. Former Pres. Obama reportedly released 30 million gallons when supply chains were disrupted during a Libyan civil war. Former Pres. Clinton used the reserves to lower fuel prices during a re-election bid. The Trump Administration authorized the release of crude after Saudi Arabia’s oil fields were damaged by drone attacks.
“We will continue to look for ways to relieve the burden of energy costs on American families,” White House spokeswoman Karine Jean-Pierre reportedly said of the rising fuel costs. “There is no plan to take action at this time.”
The U.S. Energy Information Administration explains that the following factors typically lead to increased diesel fuels costs.
- Cost of Crude: Expenses associated with producing or securing crude reportedly comprised 50 percent of the cost from 2000 to 2020.
- Demand: The diesel fuel used by truckers is a near equivalent of home heating oil. Rising demand and costs are not uncommon during cold-weather months.
- Supply: The U.S. freight hauling industry remains almost entirely dependent on petroleum. Supply chain disruption and market volatility lead to rising prices at the pump.
- Transportation: Although energy pipelines lower transportation costs, long-distance trucking adds to the expense. The further away from refineries, the more likely prices are to be higher.
The Midwest has reportedly been stung by the highest recent increases, with prices at the pump jumping 3.6 cents. The Rocky Mountain and New England states were the only late-September regions to see a sliver of cost rollbacks at 2.4 cents. California continues to post the highest diesel fuel prices — by far — followed other West Coast states. The lowest prices at the pump are found in Gulf Coast and Lower Atlantic states.