The average retail price of diesel in the United States reached $6.29 per gallon, which is the highest price since 2022. This price increase is due to various factors including high crude oil prices, retail margins, and distribution costs. In recent months, limited supplies of refined fuels and high prices in the crude oil market have led to price increases.
Factors Influencing Diesel Prices
Retail margins, which indicate the profitability of refining crude oil into petroleum products like gasoline and diesel, are used as a measure for assessing refining margins. The diesel margin is calculated by subtracting the spot market price of crude oil from the wholesale price of diesel. The high diesel margin, along with high prices for each barrel of crude oil, has pushed retail prices upward.
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Economic Impacts and Domestic Production
Since the beginning of 2023, diesel production in the United States has averaged 5.1 million barrels per day, the highest figure since 2019. U.S. refineries are currently operating at nearly maximum capacity, and in the week ending September 11, the utilization rate reached 97 percent. Given the dynamics of imports and exports, net diesel exports from the United States have sharply increased since February, resulting in reduced diesel inventories. Diesel inventories in the week ending September 11 were 15.8 million barrels, equivalent to 13 percent below the five-year seasonal average.
The continued reduction in diesel inventories has led to an increase in refining margins. It is expected that global production of refined fuels will remain below last year's levels in the coming months, which will help maintain high levels of net exports, low inventories, and high prices.
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