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For the first time since February 2005, the average U.S. retail price for diesel fuel fell below $2 per gallon, according to the Energy Information Agency’s (EIA) weekly survey.
Average on-highway diesel fuel retail prices were $1.98 per gallon on 15 February. The last time it came close to breaking this barrier was early 2009.
The average price of diesel has dropped for 14 consecutive weeks.
Related: OPEC Ups Pressure On Iraq, Iran To Freeze Production
“Falling diesel prices reflect both decreasing crude oil prices and increasing inventories of crude oil and refined products,” the EIA noted.
While at a record low, diesel prices are still higher than gasoline prices due to the federal fuel taxes imposed on diesel and the higher production costs associated with diesel, according to the EIA.
Diesel prices have seen a cumulative 50.2-cent drop over the 14-week stretch of declines, with several of these weeks reaching low price levels not seen in several years. The current price per gallon is down 88.5 cents on an annual basis.
Related: Oil Production Rumor Mill Continues To Turn As Iran Hints At Freeze
In late December, US gasoline prices fell below $2 per gallon for the first time since 2009, and the EIA expects this to hold throughout the year in a scenario that is great for consumers.
Analysts are concerned that the record drop in diesel signals that not only are we looking at a global crude oil supply glut of major geopolitical proportions, but also a resultant refined products glut.
By Charles Kenndy for Oilprice.com
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Charles is a writer for Oilprice.com