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Diesel Prices Remain High as Gas Prices Drop

RENEE MONTAGNE, host:

Our business news starts with lower gasoline prices.

The price of gasoline has fallen to its lowest level of the summer, just as vacation season is coming to an end. The Energy Department says the average price of gasoline has dropped nearly $0.20 a gallon in the last three weeks.

But the price of diesel fuel has barely budged. NPR's Scott Horsley reports.

SCOTT HORSLEY reporting:

If the Energy Department had said a year ago that the average price of gasoline would be $2.84 a gallon, drivers might have screamed highway robbery. But now, that price almost seems like a bargain.

At an Arco Station in San Diego, Robert Lopez(ph) and Cheney Davis(ph) were just happy to see any price on the pump that didn't start with the number three.

Mr. ROBERT LOPEZ (San Diego): I feel wonderful about it. Yeah. It's, I'm glad to see this happening.

Ms. CHENEY DAVIS (San Diego): I don't think that's so bad, because it was, like, $3.30. So it's not bad at all.

HORSLEY: Unleaded regular is selling for $2.96 a gallon at this station, and cars are lined up three-deep to buy it. The station's price is about $0.15 below the average for California, but its still not low enough for customer Lisa Paponte(ph).

Ms. LISA PAPONTE (San Diego): They can go down a whole lot more. We need cheaper gas prices.

HORSLEY: Still, Paponte is lucky she's not buying diesel fuel. At the So Cal Truck Stop a few miles away, near the Port of San Diego, diesel sells for $3.21 a gallon, or about $0.25 more than the Arco price for gasoline. Trucker Mark Gann's(ph) rig is a diesel guzzler.

Mr. MARK GANN (Truck Driver): About five miles a gallon, sometimes six on a good day, going downhill.

HORSLEY: Gann has just dropped off a load of frozen chickens on his weekly run from Arkansas, and he's topping up his tank for the trip home with a load of produce. He figures his fuel bill runs between $1,000.00 and $1,500.00 a week.

Mr. GANN: Probably in excess of 100 gallons a day. That's serious burning. There it goes right there. We're just going to kind of even it up to 100 gallons and then go on up the hill and get our produce and head back to Arkansas.

HORSLEY: Even as gasoline prices have fallen sharply in the last few weeks, the average price of diesel fuel has stayed within a few pennies of its summertime peak.

Mr. GANN: We're hoping to see it come down, but we're not holding our breath.

HORSLEY: In fact, the Energy Department's Doug McIntyre(ph) says, diesel prices could go the other way.

Just as the end of the summer driving season brings some relief to the gasoline market, cooler fall weather has the opposite effect on diesel prices.

Mr. DOUG MCINTYRE (Energy Department): Diesel fuel is very similar to heating oil, so when demand for heating oil goes up, it usually also includes upward price pressure on diesel fuel.

HORSLEY: Of course, both gasoline and diesel prices are subject to swings in the cost of crude oil. Crude oil prices dropped almost $2.00 a barrel yesterday when forecasts said tropical storm Ernesto would probably steer clear of the oil-rich region of the Gulf Coast.

Scott Horsley, NPR News, San Diego. Transcript provided by NPR, Copyright NPR.

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Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.