Energy market participants and investors are closely scrutinizing the latest projections from the U.S. Energy Information Administration (EIA), which recently released its updated Short-Term Energy Outlook (STEO) on May 6. This crucial document signals an upward revision in the anticipated trajectory for U.S. on-highway diesel fuel prices for both 2025 and 2026, a development with significant implications for transportation costs, industrial operations, and the broader economic landscape.
EIA Revises Annual Diesel Price Expectations
The May STEO now forecasts the average U.S. on-highway diesel fuel price to settle at $3.49 per gallon in 2025, climbing slightly to $3.54 per gallon in 2026. This represents a noticeable increase from the previous April STEO, where forecasts stood at $3.44 per gallon for 2025 and $3.53 per gallon for 2026. The upward adjustment, though modest, reflects evolving supply-demand dynamics and geopolitical considerations influencing the global distillate market. For context, both the April and May outlooks affirmed that the average U.S. on-highway diesel price for 2024 was $3.76 per gallon, providing a benchmark against which future movements are measured.
Detailed Quarterly Outlook Points to Shifting Trends
Delving deeper into the quarterly projections reveals a nuanced picture for the coming periods. The latest STEO anticipates the U.S. on-highway diesel fuel price to average $3.50 per gallon in the second quarter of 2024, before easing to $3.40 per gallon in the third quarter, and then recovering slightly to $3.44 per gallon in the fourth quarter of this year. Looking into 2025, the EIA projects stability in the first two quarters at $3.52 per gallon, followed by a rise to $3.55 per gallon in the third quarter, and concluding the year at $3.58 per gallon in the fourth quarter.
These updated forecasts show some divergence from the April STEO’s earlier outlook. The previous report had projected a second-quarter 2024 average of $3.41 per gallon, falling to $3.30 per gallon in the third quarter, and then rising to $3.41 per gallon for the fourth quarter of 2024. For the subsequent year, the April STEO had offered projections for 2026, forecasting an average of $3.51 per gallon in the first quarter, $3.49 per gallon in the second quarter, $3.53 per gallon in the third quarter, and $3.57 per gallon in the fourth quarter of that year. Notably, both STEOs acknowledged that the average U.S. on-highway diesel fuel price registered $3.63 per gallon during the first quarter of 2025, indicating an observed average rather than a forecast for that specific period.
Current Market Prices and Recent Fluctuations
Beyond future predictions, recent market data provides a snapshot of current diesel price movements. The EIA’s latest diesel fuel update, published on May 13, indicated a gradual decrease in the average U.S. on-highway diesel fuel price over early May. On April 28, the price stood at $3.514 per gallon, declining to $3.497 per gallon by May 5, and further to $3.476 per gallon on May 12. This May 12 price point marked a substantial $0.372 per gallon reduction compared to the price recorded one year prior, underscoring a softening in the immediate term compared to previous periods.
Regional disparities remain a prominent feature of the U.S. diesel market. As of May 12, the West Coast Petroleum Administration for Defense District (PADD) region recorded the highest average on-highway diesel fuel price at $4.211 per gallon. In stark contrast, the Gulf Coast PADD region enjoyed the lowest prices across the nation, averaging $3.143 per gallon. These regional variations highlight the impact of local supply chains, refining capacities, and transportation costs on consumer prices. The U.S. is segmented into five PADD regions for administrative and statistical purposes, encompassing the 50 states and the District of Columbia, with PADD 1 further subdivided. Additional PADDs 6 and 7 cover U.S. territories, providing a comprehensive framework for energy data analysis.
Broader Market Context and Historical Perspective
Further reinforcing the current market trends, independent data from May 15 shows the average U.S. diesel price at $3.548 per gallon. This figure reflects a slight increase from the previous day’s average of $3.542 per gallon and the week-ago average of $3.537 per gallon. However, it represents a decline from the month-ago average of $3.585 per gallon and a significant drop from the year-ago average of $3.935 per gallon. This broader view confirms the downward trajectory experienced over the past year, offering some relief to consumers and industries reliant on diesel fuel.
From a historical perspective, the current prices stand well below the peak recorded on June 19, 2022, when the average U.S. diesel price soared to an unprecedented $5.815 per gallon. This record high underscores the volatility inherent in the energy markets and the substantial shifts that have occurred since then. For investors monitoring the energy sector, these fluctuating forecasts and current price trends are critical indicators of the health and direction of the transportation fuel market. The EIA’s latest diesel fuel update, which pinned the diesel price at $3.59 per gallon as part of its cost breakdown, further illustrates the components contributing to the overall pump price.
