Diesel Prices Soar on Tight Refined-Fuel Supplies
Rising diesel prices are mainly driven by tight refined-fuel supplies rather than crude oil alone. According to Kansas State University agricultural economist Greg Ibendahl, high diesel prices have increased harvest and transportation costs for farmers.
Since February, U.S. retail diesel has risen $2.25 per gallon to $5.97 on September 7. Ibendahl estimates that the refining margin contributed $1.71 of this increase, while crude oil accounted for only 68 cents.
The global distillate supply has tightened due to refinery disruptions in Russia and the Middle East. U.S. refineries are running at full capacity, but exports and limited global refining capacity continue to compete for available diesel.
EIA expects tight inventories and harvest demand to keep pressure on diesel prices into fall and winter, with relief dependent on recovering international refinery production.