Petroleum supplies and pricing – particularly distillate fuels like diesel – were in high global demand and substantially impacted by the Russian war against Ukraine in 2022, seeing the highest price at the pump ever recorded. Current diesel prices are running at $4.549 (national) to $5.08 a gallon (West Coast), up 89 cents from last year.
Recent studies by the Clean Fuels Alliance America showed that the US production of biodiesel and renewable diesel consistently reduces distillate fuel prices by increasing the supply. As the production and availability of cleaner, better fuels grew over the last decade, the price impact increased to a 4% benefit in 2020 and 2021, keeping diesel fuel prices lower at the pump.
Looking ahead to the rest of 2023, the Energy Information Administration’s (EIA) Short Term Energy Outlook forecasts that global oil inventories will fall slightly in the first half of the year, before rising by almost 0.7 million barrels per day in the second half. The EIA’s forecast envisions global oil inventories higher at the end of 2023 than earlier predictions, leaving crude projections for $92 per barrel in 2023, which is $3/barrel less than forecasted in December 2022.
The EIA projects our nation’s refinery utilization will remain near its five-year average through 2023. It expects the combination of a slight contraction in the economy and refinery maximization of distillate fuel production will reduce distillate prices in the next five months. The EIA also forecasts US diesel refining margins will fall by 19% this year compared with last year. However, the EU’s ban on seaborne imports of petroleum products from Russia creates supply and price uncertainty for distillate markets in early 2023.
Renewable Biodiesel Fuels
The role of renewable biodiesel fuels is growing, as a key strategy to help decarbonize the transportation sector. Necessary to achieve that is more investment in feedstocks and refining capacity to produce the high-quality renewable diesel fuels. The global renewable diesel market by production has reached 2.61 billion gallons in 2021. The market is expected to reach 7.45 billion gallons per year by 2027.
To read the full story, visit https://dieselforum.org/news-posts/posts/the-year-ahead-whats-in-store-for-consumer-diesel-vehicles-and-diesel-fuel-prices.
Author: Allen Schaeffer, Diesel Technology Forum