Outside of not changing at all, the smallest amount the weekly Department of Energy/Energy Information Administration retail diesel price can move is one-tenth of one cent.
And that’s how much it went down effective Monday: 0.1 cent per gallon, to $3.372.
The small move means that since the weekly price posted June 28, the benchmark price for fuel surcharges has moved in a tight range. On June 28, the price moved up 1.3 cents to $3.30 a gallon. Since that time, it has been as high as $3.373 — posted just a week ago — and back down to $3.324 on Aug. 23. It’s a 7.2-cent range over 12 weeks.
Contrast that with the prior 12 weeks when the DOE/EIA price moved in a range roughly double that.
Oil markets remain somewhat stunned at the lack of reaction to the continuing loss of oil production out of the Gulf of Mexico.
More than two weeks since oil and natural gas platforms in the Gulf of Mexico began shutting in anticipation of Hurricane Ida, the federal Bureau of Safety and Environmental Enforcement reported Monday that roughly 793,000 barrels per day of offshore U.S. production remained offline. That is a significant amount this long after the initial closures, about 6.8% of all U.S. production pre-Ida.
And yet the price of benchmark West Texas Intermediate crude, after a settlement Monday at $70.45 a barrel, isn’t up even $2 from its settlement of $68.67 on Aug. 27, the last trading day before Ida made landfall.
One thing that has helped keep markets in check is that the Gulf of Mexico refining sector that was impacted by Ida is either back online or getting there. Only the Phillips 66 Alliance refinery near New Orleans appears to be headed for an extended shutdown.
Philip Verleger, a longtime energy economist, argued Monday in his weekly report that recent actions by governments in China and the U.S. have helped soften the blow of the lost crude.
The U.S. Strategic Petroleum Reserve has lent ExxonMobil oil for its Baton Rouge operations. But more importantly, in a planned sale that happened to coincide with the production in the Gulf of Mexico, the SPR late last month announced the sale of 20 million barrels of crude as part of a long-planned budgetary move.
Meanwhile, China announced last week the sale of oil from its own strategic reserves.
“The actions by Chinese and U.S. officials make oil an unattractive bet for those who would speculate on oil prices,” Verleger wrote. “The eventual outcome is unclear. However, the risks of taking long positions are considerable.”
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