National diesel prices drop below $2 a gallon for first time in 11 years

The national average retail price for a gallon of diesel fuel dropped today to below $2 for the first time in almost exactly 12 years, according to weekly data from the Department of Energy's Energy Information Administration (EIA).

The national on-highway price, calculated from a weekly survey of 400 truck stops and service centers, was reported at $1.98 a gallon, down nearly 3 cents from the week before, EIA said. The last time prices fell below the $2 a gallon threshold was on Feb. 14, 2005, when they were at $1.986 a gallon. Prices haven't been this low, on a non-inflation-adjusted basis, since late January 2005, when they were slightly below $1.96 a gallon.

The lowest prices were found in the Gulf Coast, Rocky Mountain, and Midwest regions. In the Gulf region, which generally reports the lowest pump prices due to its close proximity to the nation's refining infrastructure, the average price came in at just below $1.86 a gallon. The last time prices there plumbed such depths was in mid-September 2004, according to EIA data. California checked in with an average price of $2.31 a gallon, the highest in all regions surveyed.

Diesel pump prices are down 88.5 cents a gallon from the same period in 2015, EIA said.

The agency, in its monthly short-term forecast issued late last week, predicted that diesel prices would average $2.22 a gallon in 2016 and $2.58 a gallon in 2017. The forecast is based in large part on price fluctuations in Brené North Sea crude oil, which is the benchmark for U.S. diesel and gasoline prices. Brené prices will average $37.52 a barrel this year and $50 a barrel next year, predicts the EIA forecast.

In London trading today, Brené closed at $32.18 a barrel, down $1.21 a barrel from the prior day's trading. Brené prices rose sharply early in the day amid reports that Saudi Arabia and Russia would freeze output in an effort to curb supply and stabilize prices. However, prices retreated after the countries said they would freeze output only if other big exporting countries joined them.

Oil prices have fallen by more than 70 percent in the past 20 months due to surges in production from U.S. shale oil production and robust production from countries like Saudi Arabia and Russia.