EIA expects that on-highway diesel fuel retail prices, which averaged $3.84 per gallon in 2011, will average $4.06 per gallon in 2012, down 9 cents per gallon from last month’s Outlook. In 2013, diesel fuel retail prices are projected to decline to $4.03 per gallon, 8 cents per gallon lower than the previous Outlook.
Since the middle of March gas and diesel fuel margin have doubled as pricing has come down.
Over the last month gasoline prices have plunged with the national average now in the $3.70s and some states east of the Rockies sporting averages in the $3.50s.
The U.S. Energy Information Administration (EIA) lowered the average regular gasoline retail forecast for the current April-through-September summer driving season to $3.79/gal, 16cts/gal below their prior forecast.
Some pundits are now talking about pump prices falling back to $3/gal as easily as they talked about prices hitting $5/gal.
Crude futures fell to a fresh 2012 low Wednesday settling down to 92.81/bbl as mounting worries out of Europe, rising global supplies and disappointing Chinese industrial production figures weighed on the market. Prices fell as a report showed that U.S. crude supplies had climbed to the highest level in 22 years. Supplies grew last week by 2.1 million barrels. That’s a bigger increase than analysts expected, and more could be on the way.
Adding more pressure, Saudi Arabia’s oil minister over the weekend repeated his desire to see benchmark Brent crude drop to near 100.00/bbl. Brent settled down 69 cents at 111.57 Monday and would need to drop an additional 10.4% to hit Naimi’s target. The last time Brent settled below 100.00 was October 4, 2011 when prices reached an eight month low of 99.79. Product losses managed to keep pace with the drop in crude. June RBOB settled .0418 lower at 2.9590 and heating oil fell .0341 to 2.9295.
Oil is down nearly 13% since the beginning of May!
There is no reason to believe that since gas and diesel fuel typically lag begin in price to crude oil that we will continue to see these products go down.
Let’s not forget that hurricane season for the Pacific started on May 15 and Atlantic hurricane season begins on June 1. They can always throw off fuel inventories.