Diesel Average Falls 3.3¢ to $3.628

This story appears in the Dec. 1 print edition of Transport Topics.

The U.S. retail diesel average fell 3.3 cents to $3.628 a gallon last week as the Midwest continued to recover from a brief price spike in November, the Department of Energy reported.

Last week’s decrease was the second straight, leaving trucking’s main fuel only a half-cent above the 3½-year low set Nov. 10.

In between, the national average jumped 5.4 cents, which was attributed to a 16-cent spike in the Midwest due to high distillate demand for the fall harvest. That resulted in the first increase in the average since June.

But last week, diesel declined in all five national regions, led by a 4.3-cent drop in the Midwest to $3.743 a gallon, DOE reported after its Nov. 24 survey of fueling stations.

While the Midwest remained the highest regional price, “things are pretty much back to normal,” said Sean Hill, an analyst with DOE’s Energy Information Administration.

“All the refineries are running at normal rates and, barring any outages,” should continue regular diesel and gasoline production, he said.

Overall, diesel has dropped 39 cents since its 2014 high of $4.021 in March, leaving it 21.6 cents below a year earlier.

The retail regular gasoline average, meanwhile, plunged 7.3 cents to $2.821, its biggest drop in five weeks and lowest price in more than four years.

The fuel — which has fallen 88 cents since June — is at its lowest level since it was $2.806 a gallon Nov. 1, 2010, according to DOE. It also is 47.2 cents less than a year ago, DOE said after its weekly survey of filling stations.

“It is lower oil prices that are the main impetus” of lower pump prices, Trilby Lundberg, president of the Lundberg Survey, told Bloomberg News last week.

“The oil supply continues to be fabulous,” Lundberg said Nov. 24 after releasing her twice-monthly survey of filling stations, which also showed gasoline pump prices at a four-year low.

Oil futures closed at $75.78 a barrel Nov. 24 on the New York Mercantile Exchange, also near a four-year low, Bloomberg News reported.

Crude has plunged more than $30 on the Nymex since topping out at more than $107 a barrel in June. It bottomed out at a four-year low $74.21 on Nov. 13.

One trucking company owner told Transport Topics that his fleet uses several methods and equipment add-ons to boost fuel mileage.

“We have diesel-fired heaters and super-single wide-base tires in our entire fleet,” said M. Bjorn “Sam” Petersen, founder of M. Bjorn Petersen Transportation in Glendale, Arizona.

The tires add about 0.6 mpg to its fleet’s fuel economy, which “is pushing about 6.3” mpg, he said.

The refrigerated truckload carrier has a fleet of 60 trucks and uses single-drive axles instead of twin- screw axles, which also helps boost fuel economy, Petersen said.

In Austria, OPEC ministers were scheduled to meet after TT went to press to decide whether to cut production in light of low prices.

Analysts were split on whether the cartel would vote for a production cut, but a reduction of 1.5 million barrels a day “should put in a floor of $70 a barrel” on Nymex-traded crude oil, said Phil Flynn of the Price Futures Group in Chicago.

“Whether [cuts] will hold over in the long run would then depend on the demand response from European and China’s economy,” Flynn wrote in a Nov. 25 report.

Globally traded Brent crude oil — which also fell to a four-year low $77.92 in mid-November — climbed to over $80 a barrel last week in advance of the OPEC meeting.

Brent generally trades higher than Nymex-traded West Texas crude futures, and Brent’s modest price upturns in the third week of November were the first since September.

Meanwhile, Nymex-traded ultra-low-sulfur diesel futures fell to $2.36 a gallon Nov. 19, the lowest level since they began being traded on the exchange in early 2012, Bloomberg figures showed.