Diesel Average Dips 0.6¢ to $3.909; First Price Decline in Five Weeks

This story appears in the Aug. 12 print edition of Transport Topics.

U.S. retail diesel prices declined for the first time in five weeks, as the national average price dipped 0.6 cent to $3.909 a gallon, according to the Department of Energy.

The diesel average had increased by almost 10 cents a gallon over the previous four weeks and was 5.9 cents a gallon higher than a year ago, according to DOE’s Aug. 5 survey of filling stations.

The average price of gasoline also declined last week, easing 1.4 cents to $3.632. Gasoline has now fallen 5 cents over the past two weeks. A year ago, it sold for $3.645.

Phil Flynn, an analyst with the Price Futures Group, based in Chicago, said that fuel prices have eased a bit because concerns over instability in Egypt have eased, the summer driving season is nearing an end and many of the big refineries that were down for maintenance are coming back on line.

“So we should start to see some relief in the near term,” Flynn told Transport Topics. “What does that mean at the pump? Maybe 10 to 25 cents lower at the pump — or even lower.”

The cost of crude also fell/rose last week, closing at $103.40 a barrel Aug. 8, after climbing to $107.89 a barrel a week earlier on the New York Mercantile Exchange. Crude closed at $93.35 a year ago.

DOE said that after declining to a 2013 low of $97 per barrel April 17, crude oil spot prices increased to an average of $108 per barrel in July.

DOE predicted that the crude oil spot price will fall from an average of $112 per barrel in 2012 to annual averages of $106 per barrel and $100 per barrel in 2013 and 2014, respectively, reflecting the increasing supply of liquid fuels from non-OPEC countries.

It also said in its updated forecast issued last week that diesel fuel will slide to $3.89 in the second half of the year and average $3.92 a gallon this year. That’s up from last month’s projection of $3.88 for all of 2013.

Trucking’s main fuel averaged $3.97 a gallon last year, according to DOE.

Last week’s diesel price decline was welcome news to U.S. motor carriers attempting to find ways to keep fuel costs in check.

Sharon Daniels, secretary-treasurer and general manager of G.R. Daniels Trucking, based in Hutchinson, Minn., said the carrier governs its tractors at a maximum speed of 64 miles per hour to curb fuel use.

Because drivers at Daniels are not happy with the cap, the company pays them fuel-economy and safety bonuses based on performance.

“We’ve absolutely noticed better miles per gallon,” Daniels said.

The company has 16 trucks and burns about 500 gallons per truck each week, or 8,000 gallons total. At about $4 a gallon, that’s almost $32,000 a week.

“That’s real money,” Daniels said.

The company also works with fuel vendors to get the greatest possible discounts for bulk purchases.

GRD hauls general commodities in truckload sizes, mainly throughout the upper Midwest.

“There is some push-back on the fuel surcharge from customers who do not accept the Department of Energy figure,” Daniels said. “We have to compromise and do a separate contract for them.”

Similarly, Chris Patton, general manager of Watsontown Trucking Co. in Milton, Pa., said that, with a combination of fuel technologies, such as low-rolling-resistance tires, the company’s 265 trucks are get an average 7.02 miles per gallon.

The dry van hauler negotiates discounts with truck stops, stores 45,000 gallons of bulk fuel at its headquarters terminal, installs auxiliary power units on all its trucks to cut down on idling time and closely monitors fuel usage with an onboard communications system.

“We also have a simulator we purchased and are putting drivers through progressive shifting techniques and training them to increase fuel economy,” Patton said. “The simulator uses aggressive shifting pattern techniques. It’s set up the same as our trucks are.”

The company also offers quarterly bonuses to drivers based on fuel economy and performance.

In addition, the company attaches a device to the back of its truck cab fairings to reduce drag by deflecting wind off the trailer, Patton said.

Meanwhile, gasoline’s average price for the third quarter of this year is predicted to be $3.59 a gallon — matching its price for the first half of the year — before declining to $3.33 in this year’s fourth quarter, the agency said.

Gasoline, which averaged $3.63 a gallon last year, is expected to average $3.37 next year, DOE projects.

DOE also boosted its 2013 crude oil forecast by more than $2 from last month’s outlook, to $96.96 a barrel. Oil will drop to $92.96 next year, the report said, up slightly from last month’s DOE report.

Associate News Editor Jonathan S. Reiskin contributed to this story.