Despite new maritime diesel regs taking effect next year, on-highway diesel prices are expected to remain flat, a continuation of the stagnant pricing seen over much of the last two years. However, experts say outside factors like the presidential election, impeachment votes and other geopolitical factors could put upward pressure on pricing.
Since the beginning of 2018, diesel prices have averaged $3.119 per gallon across the U.S., reaching a high of $3.394 per gallon during the week ending Oct. 15, 2018, and a low $2.965 per gallon during the weeks ending Jan. 21 and Jan. 28, 2019.
The Department of Energy’s Energy Information Administration projects 2020’s diesel prices to average $3.09 per gallon, up just three cents from $3.06 per gallon in 2019.
Sean Hill, an industry economist with EIA, says the biggest factor that could impact diesel prices in 2020 is the impending tightening of maritime diesel regulations by the International Maritime Organization (IMO) and the interaction of those impacts with EIA’s crude oil forecast. The new maritime standards, which take effect Jan. 1, lower the maximum sulfur content for marine fuel oil used in ocean-going vessels.
“They are essentially two counteracting forces where our crude oil price forecast is falling, while at the same time we expect the IMO regulations to add some upward demand and price pressure on U.S. diesel fuel prices, resulting in fairly moderate changes on average from [2019 to 2020],” Hill says.
Chris Lee, vice president of marketing for ProMiles, says 2020 is the first year in a while that he’s having a hard time forecasting diesel pricing. He says there are a number of outside influences beyond the new maritime regulations that could impact diesel prices, including weather, demand, the ongoing presidential impeachment proceedings and more.
Hill with EIA notes that his agency does not “include any assumptions or expectations regarding future elections or potential policy changes” in its forecast.