The average price for a gallon of diesel fuel fell last week to $3.80 a gallon, the lowest level since mid-2012, according to weekly data published yesterday by the Department of Energy's Energy Information Administration (EIA).
The EIA projected that diesel prices will average $3.86 a gallon by the time 2014 is over and will average $3.82 a gallon in 2015. That is 2 cents and 5 cents a gallon, respectively, below what the agency had projected a month ago. Diesel prices averaged $3.92 a gallon in 2013.
Diesel prices, on average, are 17 cents a gallon below the levels for the same period in 2013, according to the EIA data. Of the regions surveyed only California, at $4.06 a gallon, held above the $4.00 a gallon threshold last week. The Midwest checked in with the lowest price at slightly more than $3.70 a gallon, according to the data.
The last time that average nationwide diesel prices exceeded $4.00 a gallon was in mid-March.
Based on fuel mileage of 6.5 miles per gallon, a 1 cent drop in fuel prices lowers a truck's fuel costs by 2/10ths of one cent per mile, according to estimates from consultancy IHS Economics. The savings can add up considering that a typical rig will log 100,000 miles or more per year, according to Charles W. Clowdis Jr., who runs the unit's global trade & transportation practice. Clowdis said he expects oil and diesel prices to continue dropping in the near term.
Diesel prices have tracked the recent steep decline in crude oil prices. The price of a barrel of West Texas Intermediate crude has dropped more than $15 in the past year, according to EIA data. Crude oil prices account for 60 percent of the cost of a gallon of diesel charged at the pump. The balance comes from federal and state excise taxes, refining, and distribution and marketing.
Distribution and marketing expenses make up 16 percent of the cost of a gallon of diesel. By contrast, the same expenses account for only 11 percent of the average cost of a gallon of gasoline.