It seems that last year’s oppressively high fuel prices — thanks to some major global events like the start of the Russia-Ukraine war and massive supply chain disruptions — are behind us, at least for the near-term.
As of mid-July, the average price of gasoline was holding steady at about $3.56 per gallon, which is down by nearly 93 cents from the same point a year ago, according to the U.S. Energy Information Administration (EIA). Regionally, West Coast prices, unsurprisingly, were highest at about $4.55 a gallon. If you take out California, West Coast prices averaged about $4.36 a gallon. Gas was cheapest in the Gulf Coast region, averaging about $3.14 a gallon.
The nationwide average for a gallon of diesel during that period was just under $3.80, down $1.63 from the same point a year ago. West Coast prices (including California) were around $4.47. Excluding California — a state whose average diesel price was $4.85 per gallon (more than one full dollar higher than the national average) — the West Coast average was $4.13. Meanwhile, on the other end of the spectrum, the Gulf Coast regional average clocked in at about $3.51.
For some context on where that money is going, 49% of the cost of gasoline covers the crude oil, while 21% is for the refining process. Distribution and marketing account for a total of 15% and the remaining 14% is the average for taxes. On the diesel side of things, crude oil is 45% of the cost, with 16% of it going toward refining. Distribution and marketing command a higher percentage than that for gasoline, averaging 24%. Finally, taxes are responsible for the final 15%.
Let’s compare gasoline in diesel prices, with those for the most common alternative fuels. The U.S. Department of Energy’s Alternative Fuel Data Center reports price figures on a quarterly basis, with the most recent update coming in April 2023. B99-B100 biodiesel was the priciest of the non-traditional fuels, hitting $4.95 per gallon in April. Its cousin, B20 biodiesel, was nearly a dollar lower per gallon, tracking at $4.02. Then there’s liquefied natural gas (LNG), which was $4.51 per diesel gallon equivalent (DGE) and compressed natural gas (CNG), which averaged $2.99 per gasoline gallon equivalent (GGE).
Propane, which was a key topic of discussion at this year’s BevOps Fleet Summit, registered an average of $3.63 a gallon and ethanol (E85) posted the lowest price at $2.98 a gallon.
As for where prices are heading, EIA forecasts that the cost of Brent crude oil will increase gradually over the next five quarters, hitting a projected average of $83.51 for 2024, versus a 2023 average of $79.34. The projection is based on the assumption that U.S. gross domestic product (GDP) will grow around 1.5% for 2023 and 1.3% in 2024 — which were both revised up from an earlier forecast of 1.3% for 2023 and 1% for 2024. EIA expects global oil inventories to decline modestly over the next year plus.
Despite that, EIA expects that the prices of the major petroleum-based vehicle fuels to tick down slightly in 2024. Right now, the final 2023 gasoline price average (all grades) for the full year is expected to come in around $3.51 a gallon, while the overall 2024 average is projected to be $3.46 a gallon. There’s a similar trend at work for diesel, with this year’s average expected to top out at $3.96 and next year’s to be $3.84. These contrast considerably with the full-year 2022 averages of $4.08 for all grades of gasoline and $5.02 for diesel.
