The national average retail price of a gallon of diesel fuel has fallen below $3, the lowest price in more than a year.

On-highway diesel now averages around $2.90 a gallon, down more than 50 cents from a year ago.

The highest prices are in the New England region, where the average remains above $3 a gallon, while the lowest prices are in the Midwest at close to $2.80 a gallon.

Diesel prices hit a record of $4.75 a gallon just five months ago.

Crude oil prices, which form the basis of diesel fuel prices, continue to swing wildly in world markets. In the U.S., the price has been around $60 a barrel, but on some world markets it has fallen to around $50, reflecting the world-wide economic slowdown. Some analysts see a $30-$40 a barrel price as the worldwide economic slump worsens.

Crude oil hit a record $147.27 in mid-July.

Meanwhile, the U.S. Department of Energy is forecasting even lower diesel fuel and gasoline prices for next year.

On-highway diesel is forecast to average $2.73 in 2009, down $1.08 from this years average. Gasoline will average $2.37 per gallon in 2009, says USDOE.

Many analysts say the significant price gap between diesel fuel and gasoline is likely to continue for the foreseeable future and could even widen.

The U.S. Energy Information Administration, for example, expects domestic demand for diesel fuel to grow about four times faster than that of gasoline through 2015. Looking further out, toward 2030, diesel demand is expected to increase about 14 times faster than that of gasoline.

Indeed, by 2030, the USEIA expects U.S. diesel consumption to rise by 51 percent over 2006 consumption levels while gasoline use will increase by just 3.6 percent.

The Paris-based International Energy Agency says that distillates -- jet fuel, kerosene, diesel -- have become, and will remain, the main growth drivers of world oil demand. Between 2007 and 2013, the IEA expects distillate demand to increase nearly double while global gasoline demand will grow only slightly.

The continuing strong demand for diesel is due in large part to the ongoing "dieselization" of the European automobile market, as well as the expected long-term demand growth in Asia, India and the United States.

The demand for diesel, combined with a global lack of refineries that can produce the type of low-sulfur diesel that is now mandated in the United States and Europe, means diesel will continue selling at a premium relative to gasoline.

And get this: Healthy diesel demand (and the increasing value of diesel fuel) means U.S. refineries are buying more foreign crude, not less. That's a bitter fact given that cutting dependence on foreign oil has become such a cause celebre and is cited time and again as the main justification for the biofuels boom - notably ethanol production -- in the U.S. What has resulted is a phenomenon that is not helpful to the motorcoach industry and demonstrates the complexity of the fuels market.

As one executive at a large domestic oil refiner explained: "Ethanol is making diesel more expensive relative to gasoline because its expanding the pool of gasoline. But to make diesel, we have to process more crude," which in turn increases demand for crude oil.

In other words, ethanol is doing absolutely nothing to reduce overall U.S. oil consumption or imports because refiners have to buy the same amount of crude (or more) to meet the demand for products other than gasoline - that is, jet fuel, diesel fuel, fuel oil, asphalt and other products.