By Jonathan S. Reiskin, Associate News Editor This story appears in the Aug. 26 print edition of Transport Topics.
U.S. retail diesel prices changed direction last week, gaining 0.4 cent a gallon to reach a national average of $3.90 after declining 1.9 cents over the previous two weeks, the Department of Energy reported.
The diesel average is now 12.6 cents less than a year ago, DOE’s Energy Information Administration said after its Aug. 19 survey of fueling stations.
Meanwhile, the average price of gasoline declined for a fourth straight week, this time by 1.1 cents a gallon to $3.55 on Aug. 19. The four-week drop total has been 13.2 cents. Gasoline is also cheaper than a year ago, by 19.4 cents.
There is no strong force driving petroleum markets in a consistent direction now, said Denton Cinquegrana, chief oil analyst for the Oil Price Information Service.
“There are a couple of things pointing prices higher and a couple of things pointing them lower. The violence in Egypt keeps a floor under prices, but the strong pace of U.S. oil production also keeps a lid on prices,” he said.
Crude oil prices on the New York Mercantile Exchange declined last week from the week before, closing at $105.03 a barrel on Aug. 22 from more than $107 the previous week.
Two trucking company presidents showed the great range within the industry on diesel’s effects.
“We serve the oil and gas industry, so it’s not as difficult to get them to pay our fuel surcharge,” said Michael Coatney of Acme Truck Line in Gretna, La.
“When our fuel surcharge is high, they’re making a ton of money. Our surcharge has been as high as 29%, but lately it’s been around 24% or 25%,” said Coatney, whose fleet of owner-operators provided expedited transportation services for oil-field equipment.
The market in Huron, Ohio, is very different, said Daniela Stankic of DS Express.
“There are price fluctuations up and down, but it’s still always high. We’re battling a constant problem,” said Stankic, whose fleet provides a mixture of truckload, expedited and less-than-truckload services.
“Fuel is extremely high, especially when you compare it to the change in freight rates,” Stankic said, adding that the percentage increase for fuel has vastly outstripped the gain in freight rates since she started the company in 2000.
In order to cope, DS Express programs the engine control module in each tractor to monitor idling time and cap the maximum speed.
DS pays fuel-reduction bonuses to thrifty drivers, which has “increased the profitability per truck. It’s sort of semi-successful,” Stankic said.
The company has to roll its fuel surcharge expectations into a comprehensive freight rate, she said, because her shippers refuse to deal with a separate surcharge.
The company spends $65,000 to $77,000 a week to fill each truck, depending on whether the vehicle does over-the-road work or local LTL distribution. Selecting components on new truck purchases so as to maximize fuel efficiency is of critical importance, she said.
