Why Are Diesel Prices So High? How High Will They Go? – March 2022
Everyone is dreading the gas pumps this season as gas prices soar and our wallets take a hit for just doing our normal day-to-day business. Let’s take a further in-depth look at some of the reasons why it is so high and what we can expect for the future.
Why Are the Prices So High?
Diesel prices have been noticeably spiking all across the US with California reporting some of the highest prices of all but as a state averaging $5.855 as of the writing of this article. Many people have reported sightings of outlandishly higher prices than that but it is hard to sift through what is hard fact and what is exaggerated fiction. Feel free to check out our free tool to help with calculating your own cost per mile to help you gauge your costs as a trucker.
Source: U.S. Energy Information Administration
Unfortunately, the diesel market is a global market and fluctuates with everything that happens around the world. There are a number of factors that are the primary contributing factors to these sudden increases and primarily goes back to Russia.
Patrick De Haan, head of petroleum analysis at GasBuddy, said, “Sanctions put on Russia by the U.S. and European Union severely hindered Russia’s ability to sell crude oil, one of the biggest determiners for gas prices.” Another expert Ramanan Krishnamoorti, a professor at the University of Houston said, “Russia plays a big role because it produces “heavier, sour crude. Russian crude is needed because U.S. refineries are not designed to use 100% of the light, sweet crude it produces.” Quotes taken from USA Today Interviews.
What can we expect in the future?
What does this all mean to me? Everyone is being affected by the prices as grocery stores raise prices to compensate for more fees that the trucking industry is receiving. All of these changes can be slow to take effect and even slower to reverse once the price of crude oil eventually does go back down.
According to the EIA, U.S. Energy Information Administration, the price of crude oil should stabilize (avg. $4.43) and fall even lower than normal by 2023 (avg. $3.71). However, they explain, “Actual price outcomes will be dependent on the degree to which existing sanctions imposed on Russia…If production disruptions—in Russia or elsewhere—are more than we forecast, resulting crude oil prices would be higher than our forecast.”
Will it get better? Yes but maybe not in the time table that we want. The uncertainty of the global market will keep all the prices in constant flux. What we can all be certain of is that prices are high and they are going to stay that way for the foreseeable future.
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