Diesel vs. Gasoline Price Parity Bucks the Trend
WASHINGTON, D.C. — The average retail price for a gallon of diesel has dipped below the average retail price for regular gasoline for the first time in six years.
According to the U.S. Energy Information Administration (EIA), average diesel prices fell below average gasoline prices on July 13, the first time this has happened since August 2009.
This clearly bucks the trend as diesel has sold for an average premium of 34 cents since August 2009, with the disparity reaching more than 90 cents per gallon this January.
Diesel prices are often higher than traditional gasoline due to strong global demand, as well as federal fuel taxes that are 6 cents per gallon higher for diesel than petroleum.
A number of factors may have contributed to this price inversion, the EIA concluded. These include:
- Gasoline demand often peaks in summer months, while diesel demand is highest during winter heating months;
- U.S. gasoline demand rose more than expected in late 2014 through the first half of 2015 when petroleum prices reached their lowest levels in years;
- Ongoing refinery supply disruptions in California have increased the overall national average of gasoline; and
- Strong global demand for gasoline was seen in the first half of 2015.
Despite this price inversion, the EIA expects the price parity to be shortlived. Gasoline demand is expected to wane as summer turns to fall, while diesel demand will pick up in response to the fall agricultural harvest and winter heating months.
In fact, the EIA projects the price disparity to be large in December, with gasoline prices expected to average $2.27 per gallon, 60 cents less than the projected $2.87 per gallon that diesel will average nationwide.