Last week, the price of gasoline spiked anywhere from 6-9 cents to as high as 156.9 cents per litre.
The jump is due to refineries changing over from winter to summer gasoline, which causes a limited production amount and therefore the prices have increased.
The change in season is having the reverse effect on the price of diesel. As of Monday afternoon, diesel prices are inching closer to being on par with gasoline, with some of them already there. Prices in Humboldt are tracking at 174.9 cents per litre for diesel as of Wednesday.
Now with spring less than a week away, Patrick DeHaan, a GasBuddy Petroleum Analyst says that he has seen a decline in diesel.
“All be it a slow pace we have continued to see the price of diesel come down,” says DeHaan We are now looking at an average for diesel that is at about 177.0/litre and that’s down from 189.0/litre here a month.
That’s because gasoline and diesel are opposite in their consumption seasons.
In the winter months, the demand for diesel is higher due to it being used to heat homes and businesses, which makes it more expensive.
“Gasoline prices go up in the summer and diesel prices tend to go down into the summer. That’s because heating oil, which is a product of diesel, sees consumption go down. Diesel prices have been falling, a trend that should continue in the spring.”
DeHaan is forecasting that motorists could see those prices drop even further down possibly down five to 15 cents over the next four to six weeks.
“That’s really going to be contingent on the economy. Keep in mind that diesel is more of the fuel that powers the economy. If the economy sees improvement that could lead to diesel falling less significantly. Whereas if the economy sees more of a slow down with inflation and with interest rates going up that could help push diesel prices lower.”
The prognosis for the coming weeks is that gasoline prices are expected to continue rising, while diesel will see decreases.
If diesel can get on par or lower than the price of gasoline, it will mark the first time since before the COVID-19 pandemic.
The larger price difference between gas and diesel lately has been due to a number of reasons - one of them being the fact that diesel has become cleaner in the last 20 years, which in turn costs more money to produce.
“Many refineries especially those in the United States converted to producing renewable diesel,” says GasBuddy Petroleum Analyst, Patrick DeHaan. “Unfortunately, the output of renewable diesel to traditional diesel is much less, so when refineries make that transition there is less diesel capacity as a result.”
“The diesel specification has improved vastly over the last two decades compared to the 70s and 80s when you would see diesel emit thick black soot, diesel is very clean now. The cost of reducing Sulphur out of diesel is very expensive,” adds DeHaan.
Lastly, DeHaan explains that Russia’s invasion of Ukraine has impacted diesel prices.
“Russia produces a very heavy type of oil that can yield more heavy products like diesel. With a lack of heavier oil in the market, there is more of a lighter product, which doesn’t produce as much diesel. There have just been more issues that hit diesel compared to gasoline but there should be an improvement.”
According to the International Energy Agency, Russia is the world’s largest oil exporter to global markets and the second largest crude oil (which is what diesel is made from) exporter behind Saudi Arabia. In addition, they are the world’s third-largest oil producer behind the United States and Saudi Arabia.