Diesel prices continue a slow decline   

Weekly retail on-highway U.S. diesel prices decreased by 2.5 cents to $3.810 per gallon, the lowest price level since February 2011. Diesel has fallen four straight weeks by a total of 13.9 cents, but remains up 14% year-to-date, from $3.331 in January, and is still nearly double the recent low point of $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). 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 (11 months). In 2008, diesel exceeded $4 per gallon for 23 straight weeks, compared with 6 straight weeks earlier in 2011. Some forecasters are predicting lower fuel prices, but because of the weak dollar and commodity inflation, it still seems likely to me that we will see $5 diesel before we see $3 diesel.