Those who have sat through one of my presentations in the past few years have heard me say, “Fracking was a game changer, and there’s no reason why diesel should be back to $4.00 a gallon anytime soon.” The $4.00 figure is still a long way off, but we have passed the $3.00 level, and prices have been edging up quicker than I expected in recent months.

Fracking was indeed a game changer, massively increasing the potential supply of crude available to refiners, and making the US the world’s leading producer. But a few factors have mitigated this impact. First, as of January 2016, the US is once again an oil exporter after a 40-year ban. Exports are currently running at roughly 10% of production. Second, the global economic recovery and expansion continues, with the US accelerating in early 2018 and other Western nations on the uptick. Third, OPEC has been somewhat successful at achieving production cuts in recent months. All of these factors have shifted the market away from a supply-heavy scenario.

As you can see in the graph below, the price of diesel has been increasing for over a year, despite increased production. Price increases should start to level out by early summer, but due to the changing supply-demand relationship, pressure will be more upward than downward going forward.