Diesel Average Remains Unchanged at $4.692

This story appears in the June 23 print edition of Transport Topics.

The national average diesel price remained unchanged at $4.692 a gallon last week, following small declines for the previous two weeks, the Department of Energy reported, matching the longest stretch without an increase so far this year.

After bottoming out at $3.259 on Jan. 28, diesel peaked at $4.723 on May 26. That increase of $1.464 a gallon included a 57.4-cent surge between May 5 and May 26.

Although the average has not increased since then, prices have dipped only 3.1 cents and the current average is still about 67% higher than it was a year earlier, when a gallon averaged $2.805.

The unprecedented increase at the pump this year has hurt the entire trucking industry, American Trucking Associations President Bill Graves said at an ATA-sponsored seminar on managing fuel costs held June 19.

Citing his family’s experiences in the trucking industry, Graves said he had never seen “an environment as bad as the one that we’re currently in.”

He added, “If someone had a real quick, simple solution, they’d be out there waving that flag, but they’re not, so we’re going to be in this situation for a while.”

At the conference, Guy Caruso, head of DOE’s Energy Information Administration, said diesel prices will “peak and decline in the latter part of this summer.” He added that EIA was still “projecting diesel fuel prices above $4 a gallon through at least 2009.”

Sara Banaszak, senior economic adviser for the American Petroleum Institute, said the factors pushing fuel costs higher — e.g., global demand, geopolitical unrest and the weakened U.S. dollar — were not likely to abate.

“This is not just some short-term glitch in the market,” she said.

Frustrated by high prices, truckers took to the streets June 19 in Albany, N.Y., the Associated Press reported. More than 100 trucks, along with other vehicles, jammed the streets near the New York Capitol before holding a rally in a nearby park.

Based on its June 16 survey of fueling stations, DOE said the average regular gasoline price rose 4.3 cents to $4.082 a gallon, its 12th consecutive increase for a total of 82.3 cents. Gasoline has jumped 36% from its $3.009 price at the corresponding time last year.

Trucking burns about 730 million gallons of diesel a week, along with 290 million gallons of gasoline.

Mike Hales, vice president of Southern Cal Transport in Birmingham, Ala., said the run-up in fuel has added millions of dollars to the company’s expenses.

“If I bought 1.3 million gallons of fuel on the first day of March, and then I turned around and bought that same amount on the first day of June, it costs me an extra $1.76 million,” he said.

To overcome the high prices, carriers are looking to change their operations in an effort to squeeze extra fuel mileage out of their fleets.

“We’ve cut a lot of unnecessary idle time . . . we’ve stopped doing any kind of bobtailing, moving any kind of equipment that we don’t absolutely need to move around,” said Gary Golden, president of Predator Trucking in McDonald, Ohio. “I govern the speed of my trucks [at] 66 mph, and on certain runs we’re saving 10 or 12 gallons of fuel, which doesn’t sound like very much, but multiply it by $4 or $5 [a gallon] and multiply that by 30 to 40 trucks — it adds up.”

Even the larger fleets, like FedEx Corp., are feeling the pinch of higher fuel costs, cited as one reason FedEx posted its first quarterly loss in 11 years.

Meanwhile, the price of crude oil hit an intraday record of $139.89 a barrel on June 16 on the New York Mercantile Exchange before receding to close at $131.93 a barrel on June 19, Bloomberg News reported.

On June 18, President Bush urged Congress to lift moratoria on drilling off the U.S. coastline and in the Arctic National Wildlife Refuge, saying, “Unless members [of Congress] are willing to accept gas prices at today’s painful levels or even higher, our nation must produce more oil.”

Arizona Sen. John McCain, the presumptive Republican nominee for president, said he now supports drilling. However, the presumptive Democratic nominee, Sen. Barack Obama (D-Ill.), said he opposes drilling because it is “not a long-term solution.”

On June 18, a coalition of 77 business groups, including ATA, sent a letter to members of Congress urging them to take action to increase domestic oil production.