Diesel Average Up 1.2¢ to $3.915, Highest Level Since Mid-April
This story appears in the Aug. 5 print edition of Transport Topics.
U.S. retail diesel prices rose 1.2 cents last week to a national average of $3.915 a gallon, the highest level since mid-April, the Department of Energy reported.
Last week marked the fourth straight weekly increase in the national average — totaling 9.8 cents — DOE said after its July 29 survey of fueling stations.
A year ago, diesel was $3.796 a gallon, the lowest price it reached during the past 12 months. The current price is the highest since April 15, when the average was $3.942.
DOE also said regular gasoline declined 3.6 cents to $3.646 a gallon, after rising the previous two weeks. One year ago, the gasoline average was $3.508.
The increase in diesel has followed rising prices for crude oil on the New York Mercantile Exchange, which soared 15.3% from June 21 to July 19 but since has leveled off (see related story, p. 26).
Bloomberg News said July’s oil price hike of $8.47 a barrel, or 8.8%, was the biggest monthly gain since August 2012. On Aug. 1, the Nymex price closed at $107.89 a barrel.
Diesel prices are likely to continue rising, said Brad Simons, president of the Pathway Network at Simons Petroleum, after comparing Nymex prices for oil and diesel.
“Crude oil has gone up faster in price than ultra-low-sulfur diesel,” he said.
That has put pressure on “crack spreads,” or refinery profit for making diesel, relative to the price of oil. As refineries are currently busy — operating at 91.3% of capacity during the week ended July 26 — Simons said he thinks refineries will be able to charge more in the near term for making diesel.
Several publicly traded carriers discussed fuel prices in their quarterly financial reports.
Truckload carrier Werner Enterprises said that April-to-June prices were lower than in the first quarter and a year earlier. However, during the first 22 days of July, the average diesel price was 13 cents higher than in the comparable period of 2012.
Swift Transportation Inc. gave a detailed explanation of its fuel accounting in its July 24 quarterly report. The company spent $144.4 million on diesel, or 16.1% of its second-quarter revenue. The truckload carrier also collected $172.7 million in fuel surcharge revenue but immediately turned over $72.2 million of that to third parties such as owner-operators and railroads, leaving $100.5 million for the company to mitigate its own expenses.
That left Swift with quarterly net fuel expenses of $43.9 million.
To bring some predictability to his fuel spending, Swift Chairman and CEO Jerry Moyes told stock analysts during the company’s earnings call that the company had placed an order for 200 compressed natural gas-powered trucks.
The Freightliner tractors will have the new Cummins Westport ISX12 G engines and are scheduled to arrive at the end of this year and the beginning of 2014, he said.
“We’ll be using these trucks in select fleets and lanes, where we believe that they will enable us to take advantage of two of our facilities where we will have compressed natural gas on-site, and that will be Houston, Texas, and Mira Loma, Calif.,” Moyes said, adding that “the exact maintenance and fuel cost savings are still uncertain at this time.”
Less-than-truckload carrier Saia Inc. said technology has been helpful in managing fuel spending.
“Our fuel efficiencies, supported by our electronic onboard devices, improved nearly 7%, and over 80% of all Saia drivers are now meeting their progressive shifting targets,” CEO Rick O’Dell said during Saia’s July 26 earnings call.
