Diesel Average Unchanged at $3.886
This story appears in the Oct. 28 print edition of Transport Topics.
The average U.S. retail price for diesel was unchanged at $3.886 a gallon last week, after declining for five straight weeks, the Department of Energy reported Oct. 21.
Gasoline, meanwhile, nudged up 0.6 cent to $3.36 a gallon, a reversal from six consecutive drops, DOE’s Energy Information Administration said.
The five-week diesel decline has lowered the average a cumulative 9.5 cents a gallon. The six-week drop for gasoline totaled 25.4 cents.
Trucking’s main fuel and gasoline are less than they were a year ago. Then, diesel was 23 cents a gallon higher and gasoline cost 32.7 cents more.
EIA released the average prices on schedule Oct. 21 — unlike the previous week’s figures, which were delayed because of the partial shutdown of the federal government. The results finally were released on Oct. 17, when the government reopened after 16 days.
An EIA analyst said diesel prices have been following crude oil prices, which he said have dropped after problems in the Middle East that were anticipated to be lengthy failed to materialize.
“Oil peaked at the end of August and early September because of two things,” said EIA’s Timothy Hess. “Libya had strong production during the first half of this year, but most of that came off the table. The second issue was a risk premium built in over Syria, but it looks as if that has been diffused for the time being,” he said.
With a return of much of the Libyan oil production and less likelihood of a Syrian war, Hess said, oil prices have come down and prices for refined products have followed.
On the New York Mercantile Exchange, crude oil futures prices dropped to their lowest level since June 28, closing at $96.86 a barrel on Oct. 23. It closed up at $97.11 a barrel on Oct. 24. The 12-month high for Nymex crude was $110.53 on Sept. 6.
EIA data show that 65% of the cost of diesel fuel is determined by the price of crude. For gasoline, the proportion is 71%, according to the August report. Taxes, refining, distribution and marketing make up the rest.
Hess said diesel prices did not fall as far because diesel is more of a global commodity than is gasoline. Much of the diesel refined in the United States gets exported.
“If you’re a refiner, you can make as much diesel as you want and find a market,” he said.
Fleet executives welcomed the recent slide in fuel prices, although they’re skeptical about whether they will last.
Volker Schurr, general manager of Direct Transport Services in Commerce City, Colo., said the recent price decline will not cause him to abandon the economy program he has established for his dedicated contract carrier with 30 power units.
“Customers do notice when the fuel surcharge goes down,” Schurr said.
The company buys diesel in 7,500-gallon batches and has room to store 15,000 gallons. That means Direct Transport can buy half of its fuel wholesale and the other half at truck stops in the Rocky Mountain states.
Schurr said the company buys the most fuel-efficient tractors he can find because the drivers accumulate 120,000 miles a year per truck.
“We can’t live without fuel. It’s one of the biggest costs we have,” he said.
“It’s going in the right direction,” Terry Croslow, chief financial officer of truckload carrier Venture Express in La Vergne, Tenn., said of current diesel and crude prices.
“We always try to educate drivers on fuel economy, and we buy trailers with aerodynamic skirts,” he added.
But Croslow noted that “managing the consumption of fuel is always a big challenge no matter what the price is.”
Oil traders told Bloomberg News they expect oil prices to keep falling.
“Fundamentally, it’s a weak market for West Texas Intermediate,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors.
