Demand for diesel in global markets is expected to keep US gasoline prices down for a while.
US refineries are processing a lot of diesel and exporting it to Europe and Latin America; Europe’s economy is coming back and people drive a lot of diesel-powered passenger vehicles there. South America’s market is expanding and local refiners can’t meet the demand.
According to AAA’s Fuel Gauge Report on Monday, the average price of gasoline in the US was $3.28, down seven cents from a week ago; diesel was at $3.85 and down from $3.87 a week ago.
Like gasoline, diesel has started to drop in prices in recent weeks. AAA thinks retail gasoline prices could drop another 15 to 20 cents by the end of the year.
What are some of the implications tied into the fuel price forecasts?
1. Gasoline price drop tends to strengthen US consumer confidence, which could help stabilize the environment soon after the partial government shutdown and political squabble in Washington. Consumer confidence does help new and used vehicle sales stay strong.
2. Ricky Beggs reported that reduced gasoline prices are starting to show their effect on the softening of used fuel efficient vehicle prices.
3. Commercial vehicles have been seeing higher prices for diesel than gasoline in recent years and have been adapting to it. It looks like it will be staying around 50 cents per gallon higher than gasoline; so far this hasn’t hurt the sale of diesel passenger cars in the US. US car shoppers are increasing the sales volume of German automaker “clean diesel” cars each year.