Diesel Demand Helping Gasoline Prices Stay Down

Demand for diesel in glob­al mar­kets is expect­ed to keep US gaso­line prices down for a while.

US refiner­ies are pro­cess­ing a lot of diesel and export­ing it to Europe and Latin Amer­i­ca; Europe’s econ­o­my is com­ing back and peo­ple dri­ve a lot of diesel-pow­ered pas­sen­ger vehi­cles there. South America’s mar­ket is expand­ing and local refin­ers can’t meet the demand.

Accord­ing to AAA’s Fuel Gauge Report on Mon­day, the aver­age price of gaso­line in the US was $3.28, down sev­en cents from a week ago; diesel was at $3.85 and down from $3.87 a week ago.

Like gaso­line, diesel has start­ed to drop in prices in recent weeks. AAA thinks retail gaso­line prices could drop anoth­er 15 to 20 cents by the end of the year.

What are some of the impli­ca­tions tied into the fuel price fore­casts?
1. Gaso­line price drop tends to strength­en US con­sumer con­fi­dence, which could help sta­bi­lize the envi­ron­ment soon after the par­tial gov­ern­ment shut­down and polit­i­cal squab­ble in Wash­ing­ton. Con­sumer con­fi­dence does help new and used vehi­cle sales stay strong.
2. Ricky Beg­gs report­ed that reduced gaso­line prices are start­ing to show their effect on the soft­en­ing of used fuel effi­cient vehi­cle prices.
3. Com­mer­cial vehi­cles have been see­ing high­er prices for diesel than gaso­line in recent years and have been adapt­ing to it. It looks like it will be stay­ing around 50 cents per gal­lon high­er than gaso­line; so far this hasn’t hurt the sale of diesel pas­sen­ger cars in the US. US car shop­pers are increas­ing the sales vol­ume of Ger­man automak­er “clean diesel” cars each year.

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