By Michael G. Malloy, Staff Reporter This story appears in the Dec. 24 & 31 print edition of Transport Topics. Click here to subscribe today.
Retail diesel prices continued to decline last week, falling 4.6 cents to $3.945 a gallon, while gasoline prices fell to their lowest level of the year, the U.S. Department of Energy reported.
Diesel’s decline was its third straight and eighth in nine weeks since reaching $4.15 a gallon on Oct. 15, which was the highest price in more than four years.
Gasoline fell 9.5 cents to $3.254 a gallon, the lowest since Dec. 19, 2011. Gas has plunged 62.4 cents since mid-September, declining in 11 of 13 weeks, DOE said after its Dec. 17 survey of fueling stations.
Diesel is now 11.7 cents higher than the same week a year ago, while gasoline is 2.5 cents above its year-ago level.
Both fuels had jumped about 50 cents between July and October.
A DOE analyst said the falling prices are due to lower demand, although diesel use is stronger this time of year than gasoline.
“There’s a lot of [diesel] demand globally, and we’ve been exporting a lot and getting high prices, particularly from Latin America. The market’s a little bit tighter, so the price is considerably higher” than gasoline, Sean Hill, an industry economist in DOE’s Energy Information Administration, told Transport Topics on Dec. 19.
“We could see a bump in diesel prices” as the winter weather gets colder, Hill added. Diesel competes with heating oil in the winter, as both are distillate fuels.
One trucking executive said last week his company saves money by giving its drivers a financial stake in its fuel savings, which have boosted his fleet’s mileage by more than 1 mpg over the past five years.
“Our biggest thing is our fuel bonus program that we started in 2007,” said Eric Van Handel, vice president of V&S Midwest Carriers Corp. in Kaukauna, Wis. “We made the decision that we’ll share the savings with the drivers.”
V&S uses a PeopleNet electronic control module system to gauge engine speeds, “so we have internal benchmarks,” Van Handel said. “We use that data to see how they’re driving.”
While its 160 trucks have speed governors topping out at 65 mph, most drivers run at about 61 mph to get better fuel economy, which results in more money in their paychecks.
“When you do the math, it’s probably an extra hour per haul, but when you add it up, it’s well worth their while,” Van Handel said, adding that drivers are getting paid as much as an 8-cent bonus per mile a month.
Last year, V&S also began retrofitting its trucks with “trailer skirts, trailer tails and anything else that makes them more efficient,” he said.
DOE also said last week that distillate supplies fell 1.1 million barrels in the second week of December, in contrast with the 1 million-barrel gain forecast by Bloomberg News analysts.
Gasoline inventories rose 2.2 million barrels while crude supplies fell by 1 million barrels, DOE said.
Crude oil prices rose to a two-month high on Dec. 20, closing at $90.13 a barrel on the New York Mercantile Exchange. The increase came as President Obama and congressional Republicans appeared to be moving closer to a deal that would avoid the “fiscal cliff,” Bloomberg News reported.
Oil had not closed above $90 a barrel since mid-October and held near $85 for most of November.
“If a budget deal is reached, the economy should soar and demand will increase,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass., told Bloomberg News.
