Gov't agencies project even higher prices for diesel, soy oil

By Erin Voegele | April 06, 2011

Data released by the U.S. Energy Information Administration shows the price of diesel is expected to rise over the next several months, while data published by the USDA's Economic Research Service notes high soybean oil prices are expected to continue.  

According to the EIA’s weekly diesel price report, the price of ultra low sulfur diesel averaged $3.976 per gallon on April 4, representing a slight increase of the $3.932 price listed for the prior week. The report shows that the per-gallon price of diesel has risen 26 cents per gallon in just over a month.  When compared to April prices in 2010, the price of diesel has risen by nearly $1 per gallon.

The most recent short-term energy outlook published by the administration states that retail price for on-highway diesel is expected to average $3.81 per gallon in 2011 and $3.82 per gallon in 2012. The average price in 2010 was $2.99 per gallon.

As of early March, the EIA notes that crude oil spot prices rose approximately $15 since mid-February. This is attributed, in part, to the disruption in oil exports from Libya. “Continuing unrest in Libya as well as other North African and Middle Eastern countries has led to the highest crude oil prices since 2008,” said the administration in the report. “As a result, EIA has raised its forecast for the average cost of crude oil to refiners to $105 per barrel in 2011, $14 higher than in the previous [month’s Short-Term Energy Outlook]. The next report is scheduled to be released April 12.

Although the EIA is projecting increases in the price of diesel and crude oil, the USDA’s ERS’ most recent Oil Crops Outlook report also notes a slight increase in the forecasted price for soybean oil when compared to last month. “While the price for soybean oil in February for central Illinois climbed to 54.2 cents per pound from 53.8 cents in January, it was one of the smallest increases in several months,” states the ERS in its report. “The season-average price was forecast up to 51.5 to 55.5 cents per pound, compared to 51 to 55 cents last month.” In comparison, the price of soybean oil in marking year 2009-‘10 was reported by the service to be 35.95 cents per pound.

“[In March], domestic use of soybean for methyl esters in 2010-‘11 was forecast down 200 million pounds to 2.7 billion, but still 1 billion higher than the 2009-‘10 total,” said the ERS in its March Oil Crops Outlook report. However, the report also notes that last month’s reduction in the use of soy oil for biodiesel was offset by better demand in the edible oil market, which rebounded in January. 


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