(c) Patrick DeHaan
The bleeding can't be stopped fast enough if you're a diesel consumer- you continue to see prices rise while the price of gasoline slowly falls. The spread between diesel and gasoline in some areas is at or over a dollar per gallon- yes- per gallon! This is among the largest spread between the two fuels we've witnessed in recent memory.
I have some good news for gasoline motorists, but not such great news if you take the heavier diesel fuel, and that is that gasoline prices could continue to drop while diesel remains stable or even rises. A year ago the spread between diesel and gasoline was "just" nineteen cents per gallon, and today it has quadrupled that in many areas.
By Thanksgiving, gasoline prices could drop 5-15c/gal (1-3c/L) from the averages we're seeing today. That's thanks to a sell-off in gasoline as traders dump contracts of gasoline and head to the stronger diesel/distillate complex. Demand for distillate has been very strong, thanks to South and Central America, as well as continued high demand from China. U.S. refiners are now exporting nearly 25% of all daily production of distillate as some refineries are forced to do to remain profitable as profits for refining are virtually flat for East and West Coast refineries. Even refineries that process cheaper WTI oil have seen their margins fall by almost half just in the last week.
Diesel consumers- what you're currently witnessing in the price of your product is similar to what gasoline consumers see every spring. The peak demand for diesel is winter as refineries take oil and process it into heating and diesel fuel. Meanwhile, gasoline demand takes a tumble in the fall and winter as Americans stay inside, away from the colder weather. I don't foresee a change in diesel prices anytime soon, either, adding to the pain.
Back on September 1, we told NBC News that by Thanksgiving, the national average for gasoline would be between $3.15-$3.40 (115-120c/L), and I'm hopeful that gasoline prices will continue to drop (we want to be right!), but diesel, which we didn't make a forecast for, could rise as much as seven cents between now and Turkey Day. Hang in there, I hope diesel prices will come down, but only after the peak of winter goes away.