Price of diesel

In various years, diesel fuel prices have been relatively volatile. Back in just the first month of 2000, diesel prices increased $0.11 because of a decline in freight demand and overall diesel prices increased 33.0% that year. In part, cash reserves for small trucking operations were depleted, putting many out of business. Although occurring over 15 years ago, many freight services implemented fuel surcharges, which mitigated the effects of large diesel price changes. Following the recession, particularly between mid-2008 and mid-2009, the price of diesel fuel fell so fast that fuel surcharges could not keep up with the pace. Consequently, many freight carriers remained in their respective industries despite the downturn because of positive revenue growth. Over the following two years, annual diesel prices grew 21.3% and 28.7% in 2010 and 2011, respectively. After 2010, price changes over $0.05 occurred at least once a month. Much of this can be attributed to the inherent volatility of crude oil production, which spiked in 2012.

Although overall economic conditions improved from recessionary lows, demand from emerging markets, notably China, eased in recent quarters. Though the rapid industrialization of countries such as China and India boosted demand for petroleum products, high production levels continued pressuring prices for crude oil across the globe. With these developing trends, prices have fallen steadily in the United States since the second half of 2014 as production has continued and surpluses have developed. However, despite such factors, US drillers and the Organization of Petroleum Exporting Countries (OPEC) continued producing at high levels despite recent price declines. This exacerbated the buildup in supply and put additional pressure on prices. The average price of diesel fuel remains low despite a historic agreement among OPEC countries to limit crude oil production. Although crude oil prices have made some gains since mid-2016, rising domestic production with stagnant consumption has yet to bring the market back to equilibrium. In summary, the shrinking demand for crude oil worldwide, especially with abated economic growth in key markets like China, has resulted in oil production output outpacing demand for much of the past two years. This caused oil and petroleum product prices to drop over the past several years. According to data from the EIA, this trend started to reverse in 2017 and 2018, including increases of 15.0% and 19.9% in these years, respectively.

In 2020, the diesel price dropped significantly, decreasing 16.5%. A hefty reduction transpired in various downstream industries and economic activity because of the COVID-19 pandemic that happened in the year, which reduced the need for more oil, translating to a significant incline in diesel prices. In 2021, the price of diesel rebounded as economic activity returned following the administration of COVID-19 vaccines and the lifting of lockdown mandates, which led to a price surge of 28.9% in the year alone.

In early 2022, Ukraine was invaded by Russia, which was met with the United States and European Union placing sanctions on various Russian oil products, which drove up the domestic price of diesel by 51.8% in the year. However, recent boosts in energy production have also helped to recede diesel prices from previous highs experienced during 2022, leading to prices inclining by 15.5% in 2023. The presence of volatility will play a role in how diesel will do in 2024, as even as these sources remain popular sources, the presence of alternatives in the market and recovering crude oil prices will play into prices scaling down in 2024 and 2025.