Diesel has proven itself to be a slow and steady decline in comparison to regular gas. From small businesses closing their doors to large corporations looking to continue growth, COVID-19 has affected everything. Gas prices are no exception, as they are at their lowest in history. With gasoline below $0 a barrel, the industry has spiraled into a nosedive. Experts do not expect gas prices to stop falling anytime soon.
One sector that seems to be taking less of a hit is diesel. Despite its decreasing value, the cost of diesel has remained steady. The reasons pertain to the value of diesel globally and which industries utilize this fuel as their proprietary source of power.
Diesel Is Used More Broadly than Gasoline
Despite commuter vehicles’ large numbers, diesel is the main fuel for large equipment. Semi-trucks and public transportation vehicles like buses are still heavily dependent on diesel fuel. Fortunately for this sector of the economy, things are still moving, albeit at a slow pace.
The trucking industry is still working hard to deliver essential items to store shelves across America. The industry has been working tirelessly by extending their drivers’ hours of service. This means the demand for fuel is helping to dampen the decline. This slow (but steady) decline is causing problems for the already overburdened trucking industry.
The decline comes from multiple small trucking businesses across the globe shutting down their operations. They’re not the only ones, of course, as much of corporate America has shuttered its doors.
Despite most countries around the world enforcing “stay-in-place” procedures, many areas still rely on public transportation to continue to run. In certain places, public transportation is locked in. This adds to the continued demand for diesel.
Benchmarks like Brent have found themselves on the nicer side of the economic decline, having suffered far less than other companies like WIT. WIT now has to pay another company for storage, and that storage is filling up fast. Brent has seen a slower, more manageable drop in demand.
Regardless, the US oil industry has taken a massive blow in recent months. With both Russia and Saudi Arabia in an oil production war, the cost of gas has gone down past the $0 mark.