Diesel Avg. Dips 1¢ to $3.822 as Crude Price Drop Continues

This story appears in the Nov. 25 print edition of Transport Topics.

The average price of retail diesel fuel dipped a penny last week to $3.822 a gallon, the lowest price since early July, while gasoline rose for the second time in 11 weeks, the Department of Energy reported Nov. 18.

Diesel’s decline was the fourth straight drop; the pump price has not risen in 11 weeks, DOE figures showed, although it did hold steady in two of those weeks.

Gasoline, meanwhile, gained 2.5 cents to $3.219 a gallon, its first increase since a 0.6-cent uptick four weeks ago.

Gasoline had dropped 7.1 cents the week prior to its lowest level since February 2011. Despite last week’s uptick, gas is still almost 39 cents below its level of early September.

Diesel, trucking’s main fuel, is 15.4 cents below year-ago levels, while gas is 21 cents below the corresponding week of last year, DOE said following its weekly survey of filling stations.

The fuel prices moved in tandem with lower crude oil prices, which fell to their lowest since Memorial Day,as benchmark crude futures closed at $93.03 a barrel on the New York Mercantile Exchange on Nov. 18.

One analyst said last week that, despite lower diesel prices, inventories have been declining and demand is up, and — combined with increased seasonal demand — could boost prices.

“Lower [diesel] prices have been good for consumers, but the demand picture overall is very strong both domestically and globally, and I would expect prices to rise,” said Addison Armstrong, senior director of market research at Tradition Energy in Stamford, Conn.

“Inventories are still very low — about 16% below the five-year average and slightly above last year,” he told Transport Topics. He attributed the gasoline upturn to higher demand.

DOE reported Nov. 20 that distillate supplies, which include diesel and home heating oil, fell by 4.8 million barrels the previous week. That drop is four times the five-year average of a 1.2 million-barrel draw at this time of year, Armstrong said. Analysts had forecast a decline of about 300,000 barrels, Bloomberg News reported.

Regionally, diesel prices fell more in California and on the West Coast than nationally, although that area’s prices remained among the highest in the country.

Diesel slipped 3.3 cents in California to $4.022 — the only region or subregion that topped $4 — while it declined 2.2 cents in the West Coast region, which includes California, to $3.954.

One fleet executive in Arizona said last week that he has seen diesel prices in the range of $3.60 to $3.70 for the past month.

“It’s been pretty steady for the past few weeks, which has been nice,” said Rocky Benedetto, owner and president of Tucson Trucking Inc. “All of my trucks go to California, but I don’t buy fuel there.”

Tucson Trucking, a dry-van truckload carrier, has been adding trailer skirts to its fleet as part of the California Air Resources Board’s phased-in requirements for better truck and trailer aerodynamics, Benedetto said.

“We’ve been buying 10 to 15 [skirts] per month at about $1,000 a pop,” he said. “The fuel savings so far have been a quarter-mile to a half-mile more per gallon.”

Its trucks regularly run from Arizona to Southern California. “I have 10 trucks in L.A. every day,” Benedetto said. Some run to Denver and Las Vegas.

Oil, meanwhile, has been trading in a narrow $3 range in the low to mid-$90s this month, after falling almost $15 from late August through the end of October.

Crude futures rose $1.59 on Nov. 21, the biggest increase in seven weeks, to $95.44 a barrel following a positive group of economic reports, Bloomberg reported.

Oil production is forecast to be strong next year, Armstrong said, adding that crude could fall to the mid-$80s if Iran agrees to curb its nuclear program in return for the West’s lifting sanctions allowing more Iranian oil to enter the world market.