Price of Gasoline Overtakes Diesel Fuel for First Time in 10 Years

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The price of diesel fuel has dropped below the price of gasoline in parts across the country for the first time in roughly a decade.

The steep decline, which is a result of increased demand for regular gas, should come as a welcomed surprise for school administrators and transportation departments who haven’t seen this since 2004.

Diesel along the West Coast and in the Rocky Mountains region has dropped significantly in price when compared to the amount charged for regular gasoline. In some parts of California, diesel is as much as 74 cents cheaper than gas at the pump.

While the price difference has not yet reached the East Coast and the Gulf Coast, and has remained even in the Midwest, the U.S. Energy Information Administration reported that in July, the national average for a gallon of regular gasoline was $2.74, while diesel averaged $2.72. 

Since 2004, the price of diesel fuel has been steadily increasing due to a boost in worldwide demand, along with higher production costs and excise taxes, as well as marketing and distribution costs.

The U.S. Department of Energy has predicted that the prices of diesel and regular gasoline should remain low well into 2016.

Forecasts have called for average diesel prices to top out at $2.86 a gallon this year, two cents cheaper than previous estimation, with 2016 prices expected to rise to $3.03.

The average cost of regular gasoline, on the other hand, should finish 2015 at $2.48 a gallon and increase to $2.55 in 2016.

According to the U.S. Department of Energy, due to current reductions in unemployment and lower prices, gasoline demand has been projected to climb 1.9 percent to 9.09 million barrels a day for 2015.