One thing that has been on the minds of U.S. consumers, freight carriers, and shippers is fuel prices. A semi-truck that gets less than eight miles per gallon plays a significant part of the overall cost of shipping consume goods in today’s E-Commerce market. The cost of fuel is passed on to shippers via a fuel surcharge and when the cost of fuel increases or decreases so does the fuel surcharge on every shipment.
Diesel fuel retail pricing
In their March 7, 2023 Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA) estimated March 2023 retail diesel pricing at $4.34/gallon, down from $4.42 in February. For perspective, March 2021 was at $5.37. Finally, in March 2020, the beginning of the pandemic period, diesel was $3.19/gallon . The report also forecasted December 2023 at $3.98. Shown is the EIA’s forecast for 2023 and into 2024.
Gasoline retail pricing
The March 7th EIA report also projects that 2023 will see limited growth in global demand for gasoline combined with increased gasoline production that will cause overall gasoline inventories to rise in the United States. They estimated that the annual average U.S. gasoline consumption increased by 0.3 million barrels per day (b/d) in 2022. They are forecasting a decrease in gasoline consumption in 2023 of 0.3 million b/d compared with 2022, and expect gasoline consumption will remain similar to 2023 in 2024. Additional refinery capacity that came online in late 2022, combined with additional capacity expansions expected to come online in 2023, will also contribute to rising supplies of both gasoline and diesel fuel internationally, further contributing to lower prices globally in 2023 and 2024. The EIA also estimates that U.S. refiners will continue to produce gasoline, even as prices decrease, to meet higher global demand for diesel fuel. The 2023 annual U.S. consumption of gasoline is forecasted to remain less than in 2019 (9.3 million b/d) through the end of 2024.
The EIA is forecasting retail gasoline and diesel prices will decline in 2023 and 2024, after reaching multiyear highs in the first half of 2022 with retail prices for regular-grade gasoline averaging $3.32 per gallon (gal) in 2023 and continuing to decrease to an average of $3.09/gal in 2024. They are forecasting on-highway diesel prices to decrease to an average of $4.23/gal in 2023 before decreasing further to $3.70/gal in 2024. These forecasted price decreases are based on an expectation of lower demand growth for diesel and motor gasoline with continued high production of those products.
Decreasing cost of gasoline and diesel fuel will certainly be a welcomed relief from the near record high fuel surcharges seen in the industry during the first half of 2022.