Diesel jumps 13¢ overnight up $2 a gallon from this day last year

As of this morning, gas prices surged another three cents overnight to a new record high of $4.07 a gallon, according to UCAN's gasoline survey. Diesel jumped 13 cents overnight to more than $5.05 a gallon, up from $4.92 yesterday.

Diesel fuel now costs $2 more per gallon than it did on this day last year. For an explanation of the factors contributing to high diesel prices, see our commentary, Highway Robbery, posted June 16th. The ugly truth is that at many gas stations, a gallon of refrigerated milk costs less than a gallon of diesel.

Industry insiders are at a loss to explain the surges. Historically, price hikes like these don't happen unless there is a major refining disaster such as a fire, but to our knowledge, there have been no reports of significant problems or fires at any California refineries. Instead, the price of fuel today, appears to be driven by arbitragers. The demand for gasoline and oil are down.

Yesterday, oil on the NYMEX was trading at more than $130 a barrel. At this price, the oil in a gallon of gasoline or diesel costs $3.09 a gallon. To put things in context, on February 2 of this year, regular unleaded averaged just 3.03 a gallon.

On this day last week, regular unleaded in San Diego averaged $3.96 a gallon, while diesel averaged $4.77.

On this day last month, regular cost $3.89 a gallon, and diesel, $4.44.

On this day last year, regular unleaded in San Diego cost $3.41 a gallon, and diesel cost $3.03 a gallon.