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Diesel Price Forecast 2024

December 26, 2023 Kevin Baxter

Fuel Truck

Diesel prices declined in 2023 after reaching record heights the previous year. What's in store for 2024 and how will these numbers affect the freight industry? Read on for a diesel price forecast.

Recapping 2023 Diesel Prices 

Before looking ahead, let's look back at 2023 diesel prices. The numbers don't tell the whole story, but we'll start there. The average price for a gallon of diesel as January began was $4.58. As we write this late in December, on-highway diesel comes in at $3.89 per gallon. Seems simple enough, right? Let's take a look at a price chart from the Energy Information Administration (EIA) for the year to see if it is, in fact, simple:

On-Highway Diesel Fuel Prices

Not so much, eh? So after beginning the year fairly high, prices steadily declined to a low of $3.77 per gallon in early July. Then, suddenly, they went up again, peaking for the year in September at $4.63 a gallon, even higher than the price as the year began. But that's not how the year ended, as right after that high, they dropped once again, heading down to where they stand today about 70 cents lower than the same time last year. So the average diesel price for 2023 turned out t be roughly $4.21 per gallon, down from $4.99 per gallon in 2022 - making our 2023 forecast look good. 

Predicting Diesel Prices in 2024 

There are many factors that go into what the average person pays at the pump for diesel. Predicting diesel prices in 2024 means taking all those factors into consideration - with maybe a sprinkling of planning for the unexpected. The latest outlook from the EIA has diesel prices continuing their multi-year decline, with the average price per gallon coming in at $3.95. The administration expects total world production of oil and liquid fuels in 2024 to be up slightly from this year, despite OPEC's decision to limit production, and demand to be relatively steady.

EIA Price Projections 2024

Of course, diesel prices are beholden to more than just forecasts. The key factors at play are somewhat interrelated, but separately include:

  • Oil production
  • Demand
  • Natural disasters
  • Geopolitical events

All these tend to relate to newsworthy happenings, with inflation, COVID, the Russian incursion into Ukraine, the Israel-Palestine conflict, and the year-to-year variables of hurricane season, earthquakes, etc. also factoring in - depending on severity and location. Interestingly, if you go back to why gas prices rose in late summer 2023, some reports indicated worries that a soft landing for the economy would trigger a rise in demand that would outpace production. So the overall condition of the economy is both influenced by and an influencer of the price at the pump.

Diesel and Freight in 2024

When it comes to diesel and freight costs, the two are joined at the hip. Higher diesel costs mean higher freight costs for shippers in the most simplistic reading. That's because diesel along with linehaul represent the main components of freight pricing. The spike in diesel prices a few months ago couldn't have come at a worse time for freight, as linehaul rates remained depressed throughout the year. That meant the higher cost at the pump ate into any slim profit margin due to increased operating costs - and likely had an effect on carriers - especially smaller ones - leaving the market.

Since diesel is trending back down, that variable seems to have stabilized once again. The problem for carriers is, rates have remained depressed, so profits are still hard to come by. The latest Cass Freight Index does offer some hope, with the expectation that 2024 will see rates rebound at some point, at the very least because of supply contraction. Maybe, hopefully, that'll happen because of a demand rebound, too, but that's TBD. And regardless, the wait for the freight rate rebound is expected to stretch well into the year.

However diesel prices - and freight rates - go in 2024, we can help you navigate the marketplace. Just request a quote, and we'll follow up with you on the best solutions for your business needs. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides.

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