Average U.S. diesel prices have declined, while gas prices declined for the third consecutive week.
The most common U.S. diesel price was $3.99 per gallon, which stood unchanged from last week, while the median diesel price dropped $0.05, to $3.94 per gallon, about $0.07 lower than the national average.
The gas information website compiled data from more than 11 million individual price reports covering over 150,000 gas stations across the United States.
Diesel Drops Due to Lower Industrial Consumption
Demand for diesel has been dropping over the past few months as orders from the U.S. industrial sector decline, leading to a slowdown in the freight transportation industry.“If you were looking at it in the closet, and not knowing what the wider economy was doing, you would say we’re seeing some sort of an industrial recession,” Tom Kloza, global head of energy analysis at the Oil Price Information Service, told the Financial Times.
U.S. demand for diesel was about 6 percent lower in the first quarter of 2023, compared with the same period last week in 2022, as commercial traffic begins to slacken, according to S&P Global Commodity Insights.
“Simply stated, we’re in a freight recession,” said Shelley Simpson, CEO of trucking group JB Hunt, on an earnings call earlier this month.
The states with the lowest average diesel prices were Texas ($3.41), Louisiana ($3.58), and Oklahoma ($3.60), while Hawaii ($5.84), California ($5.09), and Washington ($4.91) had the highest average diesel prices.
Some analysts remain confident that noncommercial drivers will make up for the dip in diesel consumption by driving more.
Gas Prices Continue to Fall From Record High
Meanwhile, the nation’s average gas price has fallen to $3.50 per gallon, a $0.075 drop from a week ago, according to GasBuddy.The national average is down $0.075 from April, and $0.087 per gallon lower than a year ago.
There are indications that demand for gas may be beginning to wane as drivers begin to cut back on spending.
“The oil market volatility is leading to lower prices,” said Andrew Gross, a AAA spokesman.
“We are also in a pre-summer driving season lull regarding domestic demand, said Gross, adding, “these two factors should keep pump prices drifting lower for now.”
Gas prices have declined greatly since last year, after the Russian war in Ukraine and Biden administration energy policies caused average prices to surge over $5 per gallon last summer.
The most common gas price stands at $3.39 per gallon, the same as last week, while the median gas price is down $0.08, to $3.37 per gallon, about $0.11 lower than the national average.
The states with the lowest average prices are Mississippi ($2.97), Texas ($3.02), and Louisiana ($3.06) while California ($4.77), Hawaii ($4.73), and Arizona ($4.70) have the highest average gas prices.
“For the third straight week, consumers have been greeted by falling gasoline prices across a majority of the country, thanks to oil prices holding near recent lows and the transition to smmer gasoline being essentially complete,” said Patrick De Haan, head of petroleum analysis at GasBuddy.
“While there have been a few pockets of rising prices, those have been the needle in the haystack, with nearly every single state seeing gas prices fall.”
Oil Prices See Gains After Weeks of Decline
Last week, oil prices had tumbled amid concerns that the latest interest-rate hike by the Federal Reserve and the collapse of another regional bank would further push the U.S. economy into a sharp economic downturn.However, fears of a continued banking crisis has since softened, and strong earnings reports from top U.S. oil companies caused a strong rally on Wall Street.
Oil markets saw solid gains alongside broader markets, with West Texas Intermediate crude oil up $1.63, to $72.97 per barrel, in early trading on May 8, a decline from the $75.15 per barrel the same day last week.
Brent crude oil prices rose by $1.49, to $76.79 per barrel, which was exactly $2 per barrel lower than the same day the previous week.
Last week’s report from the Energy Information Administration (EIA) showed a 1.3 million barrel drop in crude stocks, nearly 44 million barrels more than last year, including releases from the Strategic Petroleum Reserve (SPR).
The SPR fell another 2 million barrels last week, and now stands at 364.9 million barrels, which is lower than average.
Less driver demand, along with an increase in domestic gas stocks, has caused pump prices to drop, with gas inventories rising by 1.7 million barrels, 5.7 million barrels lower than a year ago.
Implied gasoline demand, the government’s measure of consumption, fell 893,000 barrels per day, to 8.62 million, according to the EIA.
Total domestic gasoline stocks increased to 222.9 million barrels, while total domestic crude inventories decreased to 459.6 million barrels last week.
Concerns over the U.S. debt ceiling have also hit oil markets, which has now become the biggest concern for market analysts.
If the White House and congressional lawmakers agree to pass a bill to avoid a potential shutdown of the federal government this June, oil prices may see a stronger rally.
