So it is a one-off that will come to a conclusion before Friday.Įven if numbers from this week are loosely ignored as having been caused by those unique circumstances, it’s hard to overstate just how out of whack the spreads between diesel and Brent crude have become. With the May contract on CME heading toward expiration Friday, traders with short positions needing to close out their trade before the end of the week found barrels scarce. Part of that number reflects this week’s squeeze in the diesel market. On Monday, the simple spread on the CME commodity exchange between the front month Brent crude price and that of ultra low sulfur diesel was $1.65 a gallon. That growth in the gasoline-to-diesel retail spread ultimately is the final step after changes in the spot products market. Based on the most recent prices published Monday, the spread is now about $1.20 a gallon.īut the retail price is at the end of a long supply chain that includes crude production, selection of types of crudes for a refinery to process, and the split in refinery output among gasoline, diesel, jet fuel and other products. A year ago, that spread was just under 40 cents a gallon. Just how much has that spread widened? The accompanying chart shows the spread between retail gasoline and retail diesel, according to the average price published each Monday by the EIA.įor the diesel-consuming industry, this price isn’t some abstract figure popped out by the government it’s the basis for most fuel surcharges. But if the relationship between crude and diesel goes through structural changes that tack on another 10 to 15 cents a gallon to the spread, those gains are going to impact the retail price of diesel even if crude sits perfectly still. The price that truckers pay at the pump always is determined primarily by the price of crude. While it’s easy to blame the Russia-Ukraine war, given the enormous role of Russia as a supplier of diesel, the reality is that the price of diesel compared to crude and gasoline began to increase well before Russia’s invasion. According to the Department of Energy’s Energy Information Administration (EIA), retail gasoline is up 26% from the start of the year - but diesel is up 42.8%. The numbers are stark on how much diesel has risen relative to other benchmark oil prices in recent weeks. Along with the pain of higher prices in general at the pump, truck drivers are dealing with the fact that diesel has risen beyond increases in crude and gasoline.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |