Ag producers seeing lower gas, diesel prices this fall

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Oct. 12, 2014 -- Agricultural producers in wide parts of the country are experiencing an easing in gas and diesel prices not seen in years. Gas prices for this time of year are the lowest since 2010 when they ran well under $3 per gallon. Diesel fuel is at its lowest price since 2012.

Regular unleaded gasoline prices have fallen steadily over the last four months, coming in last week at an average $3.29 per gallon, a nickel less than a week earlier. According to AAA, the current national average is the lowest in nearly eight months. The auto club projects the average U.S. price could fall to $3.10-$3.20 by the end of the year.

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After reaching an average high for 2014 at $4 per gallon in March and hovering just below that mark for most of the year, diesel prices are projected by the Energy Information Administration (EIA) to stay in the $3.70-$3.80 range this fall and early into 2015. That's the lowest they've been since July 2012.

Lower gas prices are attributable to a decrease in consumer demand, now that the summer driving season is over, and cheaper crude oil. Analysts also cite the reduced cost of producing what's known as a winter-blend fuel, which does not need to meet more stringent emission requirements as gasoline blended and used during the summer months.

Analysts, however, also hedge their projections with the caution that political instability in oil-producing regions or weather events, including hurricanes, could send gas prices back up.

As of Oct. 6, the lowest average gas prices were in Missouri, $3.01 a gallon, followed by South Carolina ($3.06) and Mississippi ($3.07). Hawaii remains the only state with an average price above $4 per gallon.

The latest report from the EIA shows the average diesel price stands at just over $3.73 per gallon, almost 16 cents below where it stood a year ago.

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The downward trend is attributed to seasonal supply and demand factors, including an increased production of diesel fuel triggered, in part, by increased production of its cousin: home heating oil.

The price of diesel fuel runs higher than gasoline because of the various products that can be produced from a barrel of crude oil, refiners are more likely to produce gasoline, leaving a considerably smaller supply of diesel fuel that is susceptible to higher prices. Diesel fuel has in recent years also been subject to increased regulatory costs brought on by low-sulfur mandates. Diesel fuel is also subject to higher federal excise taxes than gasoline.

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