Fuel prices Sunday afternoon as observed at the Manhattan east Dillon’s location. (Photo by Brandon Peoples/KMAN)
Gas prices jumped again on Friday in the Manhattan area as the country deals with the highest prices on record.
Across the city, a gallon of regular is now anywhere from $4.49 to $4.59, while the national average sits at $4.85, according to AAA. As bad as gas prices have been, diesel prices have been much more severe, with the national average for a gallon at $5.63, according to AAA.
K-State farm management economist Gregg Ibendahl explains that diesel inventories are about a third below over what they historically had been, despite the demand for it.
“Really refiners right now have every incentive they can to make as much diesel as they can. Remember you can only make so much diesel from a barrel of oil, so the refiners have some ability to adjust that mix of gas and diesel. Based on what the price difference is right now, I think you are going to see refiners kind of making more of a push to make as much diesel as they can,” he said.
But Ibendahl says adding refining capacity to address the diesel inventory problem means refiners would be going against what some of the trends are.
“It’s a big commitment for dollar wise and companies have to look at what’s my long-term prospects if I open up new capacity. Right now there seems to be a big push for going battery powered and green energy so I don’t know if we’re ever going to get that capacity back,” he said.
Ibendahl says he does not foresee a major retreat in diesel nor gasoline prices, but does expect the gap between the two may narrow in the coming months, but may not happen until the fall.
“Since we are quite a bit above what the predicted price should be, based on the price of oil, I think as refineries amp up their utilization percentages and start to make a little more diesel fuel, you are going to see that margin between gas and diesel come down, more closer to historical norms,” he said.
To read more about Ibendahl’s analysis on the diesel, gasoline and oil price outlook, visit agmanager.info. This story was a feature of Agriculture Today, heard Saturday morning on News Radio KMAN.