US average diesel prices again exceed $5
After several weeks of decline, the average cost of diesel in the country crept up again and exceeded $5 per gallon.
According to the AAA, the price of a gallon of diesel fuel in the US on October 15 was $5.25 per gallon. That’s down from $4.89 a gallon on October 3rd.
Meanwhile, the major oil producing nations, led by Saudi Arabia and Russia, decided to cut oil supplies to the global economy, which is likely to push prices even higher in the coming weeks.
The decision by the OPEC+ alliance to cut output by 2 million barrels a day starting next month comes as Western allies are trying to limit the oil money flowing into Moscow’s military coffers following its invasion of Ukraine.
The highest prices per gallon of diesel today are in California, where the average gallon costs $6.65.The lowest prices on the Gulf Coast, the average cost per gallon of diesel in Texas is $4.78.
Economists say cuts in oil production are likely to exacerbate inflation.
Brent crude should hit $100 a barrel by December, says Jorge Leon, senior vice president at Rystad Energy. Earlier forecasts were at $89.
Part of the 2 million bpd cut is only on paper as some OPEC+ countries are unable to produce their quota. Thus, the group can only deliver about 1.2 million barrels per day with actual cuts.
«Higher oil prices will inevitably exacerbate the inflation that global central banks are fighting, and higher oil prices will be factored into the calculation of further interest rate hikes to cool the economy,» Leon said.
This will exacerbate Europe’s energy crisis, linked in large part to Russia’s cuts in natural gas supplies used for heating, electricity and factories, analysts say, and drive up gasoline prices worldwide.
This fuels inflation as people have less money to spend on other needs.