Diesel prices lower than gas for first time in more than 10 years
BISMARCK — Stamart Travel Center manager Becca Neustel of Bismarck said she’d have to look back in the books to see the last time diesel fuel was lower than gasoline.
“It’s been a very, very long time,” she said.
The price for diesel at the station was $2.55 a gallon Thursday, 24 cents cheaper than regular unleaded gasoline.
In fact, according to the U.S. Department of Energy, the last time diesel was the cheapest fuel at the pump was 11 years ago in 2004. The department said the marker was reached in July when the average price of diesel nationwide dipped 2 cents a gallon below regular gasoline.
Neustel said truckers there seem quite happy with the lower price.
Also glad to see the plummeting diesel prices are farmers across the region, especially as they head into the harvest season.
“Anytime you see more reasonable input prices, it’s a benefit,” said Jason Frerichs, a farmer and state senator from near Wilmot in far northeast South Dakota.
With most farmers buying their fuel by the tanker load now, the lower prices can be a big chunk of change at a time and “are good for everyone” on the farm, he said.
“It’s a sweet spot for us,” said Frerichs, who farms with his father and brothers.
Craig Bieber, a cattle rancher near Leola in north-central South Dakota, is also enjoying the lower prices for transporting his cattle.
He said he often contracts for the price of his diesel that producers often store in tanks on their farms or ranches.
Not only is diesel lower than gas but it’s also at the lowest price in six years, or since Aug. 10, 2009, according to Federal Reserve data. Prices have been falling steadily since early July from an average of $2.83 a gallon July 7 to $2.61 a gallon last week, according to the energy department.
Explaining lower prices
The reasons for the declining prices are many, though oversupply is the root cause. Diesel and gasoline are both abundant now, said John Felmy, American Petroleum Institute economist.
“We’ve got a record supply for both products, but demand for diesel is lower,” Felmy said. “A lot of it has to do with weak demand from the oil and gas sector, in terms of the slowdown there. There were a lot of trucks hauling water and sand and steel” to oil wells during the Bakken boom years.
Oil drilling activity has fallen off dramatically. In North Dakota, the rig count Aug. 14 was 69, according to Baker Hughes. On Aug. 15 last year, there were 185 active drilling rigs in North Dakota. The decline means fewer trucks are servicing wells. Montana has one active drilling rig currently, down from eight for the same time last year.
Global demand for diesel is also down and contributing to the fuel’s price drop, said Ronna Alexander, state director for the Montana Petroleum Marketers and Convenience Store Association.
“There is a glut of diesel right now, and it’s just kind of one of those things that happens,” Alexander said. “Everyone was overproducing diesel because there was such a demand for it. Now, we’re not exporting as much as we were last year to places like China, which is using the most diesel of anybody.”
Tom Lutey of the Billings Gazette contributed to this report.