Diesel Prices Refuse to Budge Despite Easing Oil Prices

Oil prices have retreated from last week's highs, but diesel fuel remains stubbornly expensive across North America. The U.S. Energy Information Administration reports that the national average price for on-highway diesel reached $6.529 a gallon on September 21, up over 24 cents from a week earlier.

GasBuddy petroleum analyst Patrick De Haan attributes the disconnect between crude and diesel prices to refining capacity and tight global supplies of distillate fuels. He notes that while a barrel of crude can produce several petroleum products, refiners cannot easily convert all output to diesel when demand outpaces supply.

A significant portion of diesel's cost comes from refining margins, distribution, marketing expenses, taxes, and local market conditions. Global diesel supplies have been squeezed by disruptions in Russian and Middle Eastern exports, while U.S. inventories have fallen to unusually low seasonal levels.