Diesel edges close to record high

| Tuesday, August 09, 2005

The national average price for diesel came within a tenth of a cent of setting a record for the week ending Aug. 8.

According to the U.S. Department of Energy, the average price for the week was $2.407 per gallon, just shy of the record high of $2.408 per gallon set back in July.

Thanks to a refinery fire, California had the highest prices, jumping an astonishing 28 cents up to $2.943 per gallon. The rest of the West Coast also saw a sharp spike, rising more than 20 cents to $2.801 per gallon.

Rob Schlichting, spokesman for the California Energy Commission, told “Land Line Now” that there are three factors driving up prices in that state and along the West Coast. 

“The first factor is the increasing price in crude oil,” he said. “At the same time we’ve had refinery problems that have cut into the ability of refiners to supply as much. (And) farmers are going into the fields and there’s a definite upturn in demand for diesel. So those three problems have converged to give us not only the problems we are seeing in California but up and down the West Coast.”

While none of the other regions came close to those numbers, all of them posted increases across the board.

Prices along the East Coast rose 3 cents to $2.386 per gallon. The Lower Atlantic saw the biggest increase in that region, rising 3.7 cents to $2.334 per gallon. But even that isn’t as high as the Central Atlantic and New England areas, which came in at $2.484 and $2.492 per gallon, respectively.

The Midwest and the Gulf Coast, meanwhile, both saw increases of 4.4 cents, jumping to $2.336 and $2.323 per gallon, respectively. The Rocky Mountain region saw a 6.5-cent increase to $2.486 per gallon.

Market analysts are blaming the recent spike in oil prices for the increase in diesel costs. Prices for light, sweet crude oil topped a record-setting $64.27 per barrel in trading on the New York Mercantile Exchange on Aug. 8 before settling back down closer to the $63 mark on Aug. 9.

According to news reports, oil prices spiked on Monday following the shutdown of the U.S. Embassy and other diplomatic concerns in Saudi Arabia over a potential terrorist threat.

Meanwhile the Organization of Petroleum Exporting Countries has hiked its output by 300,000 barrels per day, bringing the total to 30.4 million barrels per day.

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