Diesel prices on pace to skyrocket, U.S. industry analysts say

8/24/2000 – Oil industry analysts are predicting that if prices keep going up the way they have been this month, truckers could expect to pay as much as $375 US per month more for diesel fuel.

Oil prices in the U.S. roared more than a nickel higher yesterday, led by a surge in diesel. Wholesale prices for some fuels are now more than 20% higher than where they began the month of August, according to the Oil Price Information Service.

Huge year-to-year inventory drops are a prime factor behind the increases. Combined crude oil, distillate (diesel and heating oil), and gasoline stocks stand at about 593 million barrels, according to data released by the American Petroleum Institute. That compares with nearly 664 millions bbl a year ago.

Fears that there could be seasonal shortages of heating oil and diesel led to wholesale increases of 4 to 6 cents per gallon yesterday, on top of 11-21 cents per gallon price hikes registered in the first three weeks of August.

Higher crude oil prices are responsible for part of the move. Since August 1, the price of benchmark crude futures has increased by approximately $4.50 per barrel, moving from $27.50 per barrel to a close on the New York Mercantile Exchange of $32.02 per barrel yesterday. Every dollar-per-barrel rise in crude oil contributes to a raw cost gain of about 2.4 cents per gallon for refined products.

There is one bright spot. The odd midsummer price surge for heating oil and diesel could ultimately ensure that there is enough fuel to meet winter needs later this year. Right now, many U.S. refineries can actually make higher profits by making diesel than they can by manufacturing gasoline, OPIS says.

-www.truckinginfo.com