Diesel Average Falls to $3.814; Price is Lowest Since July 2012

The average price for a gallon of diesel fuel in the United States fell 0.7 cent to $3.814 a gallon, the lowest level in more than two years, the Department of Energy reported last week.

It was the ninth consecutive weekly decline, totaling 10.6 cents, pushing commercial trucking’s main fuel to the lowest price since July 30, 2012, when it was $3.796 per gallon.

Diesel is down 16.7 cents from the same week a year earlier and 20.7 cents below the year’s high of $4.021, reached on March 10, DOE said after its Sept. 1 survey of fueling stations.

The retail gasoline price, meanwhile, rose a half-cent to $3.459 a gallon, its first increase in two months. Gas had fallen by a quarter in eight previous declines, and last week’s price was almost 15 cents below the corresponding week a year ago.

A fuel analyst said that low oil prices and higher refining capacity were pushing down fuel prices, in contrast to last year, when diesel gained a dime from Memorial Day through Labor Day to near $4 a gallon.

“At the pump, [2013] prices started at a low on Memorial Day and peaked on Labor Day, and this year, it was the reverse,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania.

“We’re at a point of the season where refiners . . . are now in position after numerous upgrades to take advantage of heavy [oil] feeds that are cheaper to produce,” he said.

Refiners capacity to process more heavy fuels and feeds, such as sour crude oil from Canada, are “the biggest year-over-year change,” he said.

That, coupled with the end of the refinery peak season for gasoline, has led to refiners’ “delaying maintenance and getting more product to the market,” Schork said.

That could help keep prices down as trucking enters “one of the peak demand seasons” in the fall, he said, as intermodal ramps up with goods coming into West Coast ports from Asia.

The lower prices already have prompted some trucking companies to switch buying habits.

Denver-based flatbed carrier Cast Transportation, for example, now buys about 25% to 30% of its fuel in bulk to further curtail expenses for its 104-truck fleet, said comptroller Al Wetsch.

The company’s bulk purchases add up to 30,000 to 35,000 gallons a month, and save Cast about a dime a gallon, compared with local pump prices in the Denver area, Wetsch said. At those levels, the monthly savings are $3,000 to $3,500.

“Denver seems to be a little higher than the nationwide averages,” he said. “We usually get about three or four bids on a daily basis” for bulk fuel sales, and that fuel is used primarily for Cast’s day cab fleet.

The carrier also has an agreement at a truck stop chain for discounts and gets further savings from setting speed governors at 65 mph and from monitoring its rigs’ idling percentage, Wetsch said.

“But as a flatbed carrier, we’re not able to use trailer skirts or get too dynamic, because a lot of our freight is oversized,” he said.

Oil, meanwhile, fell Sept. 2 to its lowest level in more than seven months, dropping more than $3 on the New York Mercantile Exchange to $92.88 a barrel as the peak summer driving season ended, Bloomberg News reported.

Nymex crude closed at $94.95 a barrel Sept. 4.

Schork said that despite the “geopolitical headlines that are much more serious than a year ago, the [crude oil] market’s just shrugging it off.” He noted that oil prices last week were about $20 less than a year ago.

“We’re probably looking at lower fuel prices than a year ago, heading into the end of the year,” Schork said.

After tailing off in September last year, diesel prices declined slowly, holding in the $3.80s through the end of the year.