Diesel Gas Price Update

Four weeks off the record and the national average has given back 35 cents. The rest of the price is holding, and the reason is the refinery, not the oil well.

National average $6.18 for the week of October 12, down 2 cents on the week and about $2.51 above a year ago:

The money is in the refining margin. Of a $6.18 gallon, roughly $2.35 is crude oil and $2.31 is the refining spread. A year ago that refining slice was 72 cents. East Coast distillate inventories sat 32 percent below their five-year average in September, and EIA expects them to stay 20 to 30 percent below through winter. Until stocks rebuild, crude can soften and the pump price barely moves. energynewsbeateia

The headline fixes are smaller than they sound. The Russian diesel deal announced October 9 would add about 36 million barrels to the global market if fully delivered, less than two weeks of U.S. demand, and Goldman Sachs estimates the initial release trims wholesale prices by $1 to $2 a barrel, which is a few cents a gallon at the pump. The executive order on dyed diesel waives penalties for highway use through December 31 and defers the 24.4 cent federal excise tax. Your generator already runs on off-road dyed diesel, so nothing about that order changes what’s in your tank. CNBCsustainableactionnow

Plan on $6 through the holidays. Futures markets imply roughly $6 diesel into January, and EIA’s October outlook has retail diesel above $6 this month before easing gradually toward a 2027 average near $4.50. For a 500kW unit at half load burning about 18.5 gallons an hour, that’s roughly $115 an hour in fuel against about $68 at this time last year. Test and polish what you have before you buy more of it. energynewsbeateia

Natural gas keeps pulling away. Henry Hub has been trading near $3 per MMBtu, and EIA expects gas storage to enter winter about 5 percent above the five-year average. EIA forecasts heating oil prices 34 percent higher than last winter while households heating with natural gas spend less. Several replacement projects we quoted this fall swapped a diesel standby for a natural gas or LP unit with a new transfer switch. ogjeia

Two straight weeks of declines is a trend worth watching. It is not relief. The national average has given back 33 cents since the record, but it’s still about $2.50 a gallon more than you paid for the same fuel last October, and distillate inventories are the tightest they’ve been in years heading into the season when diesel demand climbs.

Four Quick Takes:

Not out of the woods yet. Federal forecasters expect U.S. distillate inventories to stay below the five-year low through much of 2027, and their current outlook has diesel averaging about $5.55 in the fourth quarter and $4.40 in 2027. Lower than today, but still well above what you were paying last winter.

Your tank is still an asset. A few hundred gallons of standby diesel is worth considerably more than it was a year ago, and it degrades either way. Fuel testing and polishing are the cheap insurance. Pumping out a bad tank at these prices is not.

Do not skip the monthly exercise to save fuel. A run test burns a small amount of diesel. A generator that fails on the night you need it costs the building far more than a year of test runs.

Natural gas is still going the other direction. Gas prices are holding in the mid-$3 range per MMBtu, and the diesel-to-gas spread is the widest it has been in years. Several replacement projects we quoted this fall swapped a diesel standby for a natural gas or LP unit with a new transfer switch. No stale fuel, no polishing, no delivery during a storm.

Four Quick Takes:

Your fuel is now a real asset. Testing and polishing cost far less than pumping out and replacing a bad tank at these prices.

Don’t skip the monthly exercise. A run test uses a small amount of diesel. A failed start on the night you need it costs much more.

Renting? Refuel it yourself. A rental arrives with about a day of runtime, and self-fueling saves more than ever.

Natural gas is going the other direction. Prices are holding in the mid-$3 range, and several replacement projects we quoted this month switched from diesel to gas. There’s no stale fuel, no polishing, and no mid-storm delivery.