Diesel drops below $4   

Weekly retail on-highway U.S. diesel prices decreased by 6.4 cents to $3.997 per gallon. Diesel has risen 20% year-to-date, from $3.331 in January, and has nearly doubled since bottoming out at $2.023 on March 16, 2009. A view of weekly prices over the last 3 years shows much higher prices than seen in 2009 or 2010 (second graph). With the economy showing glimmers of hope and the Fed intent on a weak dollar to support exports, a return to 2008 diesel fuel prices is now a reality. Diesel prices peaked at $4.764 per gallon in July of 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008 (over 13 months). Prices have been back over $3 since October 4, 2010 (7 months). In 2008, diesel exceeded $4 per gallon for 23 straight weeks, compared with 7 straight weeks in 2011, before this week's decline. It still seems likely to me that we will see $5 diesel before we see $3 diesel.