On-highway diesel prices crept up today in all but two of the Energy Information Administration’s (EIA) 10 reporting sectors, with the national average ringing up at $3.258 a gallon.
That’s up 6 tenths of a cent from last week, when the national average was $3.252.
Although diesel in all 10 sectors is under $4 a gallon, there aren’t any sectors showing diesel below the $3-a-gallon mark.
In the Gulf Coast area, diesel was selling for $3.039 a gallon, the cheapest in the country, while California diesel is still flirting with the $4 a gallon mark, ringing up just below it at $3.969 a gallon.
New England saw prices decrease 1.5 cents a gallon — to $3.255 compared with $3.270 last week — while the West Coast Less California saw prices edge down 4 tenths of a cent to $3.465 from $3.469 the week before.
Major fluctuations in the price of oil are controlled by two things: supply and demand and market sentiment.
As demand increases (or supply decreases) the price of oil and oil distillates such as diesel normally go up. As demand decreases (or the supply increases) the price goes down. At least that’s the way it usually works.
However, the price of oil as we know it is currently set in the oil futures market. An oil futures contract is a binding agreement that gives a person or company the right to purchase oil by the barrel at a predefined price on a predefined date in the future.
Under a futures contract, both the buyer and the seller are obligated to fulfill their side of the transaction on the specified date.
Conflict in major oil-producing areas (spurring concern of less oil to go around globally, thus upping the price), a decision by major oil producers to ramp up production (creating a glut of oil and distillate price cuts) or a cut in production (causing prices to go up), colder-than-normal winters in the U.S. (using more of the distillate, home heating oil, making prices rise), and other factors also influence the price of oil and oil-distillates.
Today, U.S. crude fell 0.3 percent to $67.54 a barrel in New York. Brent crude, used to price international oils, gained 0.7 percent to $77.37 a barrel in London, The Associated Press reported.
For more information on diesel prices by region click here.