While Gas Is US$2.26 a Gallon, Diesel Remains at Almost US$1 Higher

Jan 01, 2015 05:00 AM EST

(Photo : Reuters) lls Church, UNITED STATESA taxi passes a gas station in Falls Church, Virginia December 16, 2014. For the first time in more than a decade, U.S. gasoline prices are tumbling toward $2 a gallon even as the economy grows and unemployment shrinks, a constellation that will test the theory that domestic fuel demand is in terminal decline.
Conventional wisdom holds that structural changes such as increased fuel efficiency, greater urbanization and a graying population that have taken hold since the financial crisis will temper any potential pick-up in U.S. fuel consumption next year, despite the unanticipated arrival of half-priced fuel.

REUTERS/Kevin Lamarque (UNITED STATES - Tags: ENERGY BUSINESS)

Users of gasoline are celebrating the New Year with gas prices continuing to go down as pump prices are now averaging below US$2 a gallon in some states. However, the same can't be said for diesel users as its price remains at almost US$1 higher.

According to the latest survey of AAA released on Wednesday, the national average gasoline price was down to US$2.26 per gallon from US$2.35 last week and US$3.32 a year ago.

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In Ohio, the average was a lower US$1.99. The last time the price of fuel was below US$2 in Ohio was on April 28, 2009 when it hit US$1.98, according to Ohio AAA spokeswoman Kimberly Schwind, reports AP.

The lower prices has surprised many American drivers who have been used to paying US$3 whenever they tank up since 2010 after the U.S. economy started to recover from the recession, Schwind said.

Truck driver are happy being given a break, although they insist the price reduction is long overdue since they have been paying uber high fuel prices for a long time.

In Toledo, regular unleaded gas was at US$1.61 a gallon on Wednesday, but diesel prices ranged from US$2.79 to US$3.87 a gallon, according to Gasbuddy.com, a portal that monitors fuel prices.

Patrick de Haan, senior petroleum analyst for the Midwest and East Coast of Gasbuddy.com, attributed the higher diesel price to high demand and low inventories.

He explained that fall maintenance of several refineries resulted in lower inventories, while the big corn crop caused higher demand for diesel by the agricultural sector to harvest the bumper crop.

He added that besides agriculture use, there is higher industrial demand because of the large number of machineries that run on diesel in North Dakota.

However, Oil Price Information Service of Gaithersburg energy analyst Tom Kloza, pointed out that truckers are paying lesser fees than owners of vehicles that run on diesel such as the pricey BMW since wholesale price of diesel which truckers pay is US$1.80 a gallon.

De Haan and Kloza said average diesel price for consumers is expected to go down below US$3 a gallon in the next 30 to 40 days.

TagsGas prices, diesel