December 3, 2007 7:45 AM, EST

Diesel Climbs 3.4¢ to $3.444

Average Price Hits Third Record in Four Weeks

By Dan Leone, Staff Reporter
This story appears in the Dec. 3 print edition of Transport Topics.
The national average price of diesel pushed past a record level for the third time in four weeks, rising 3.4 cents a gallon to $3.444, the Department of Energy reported.
Diesel, which fell 1.5 cents the prior week, has gained 28.7 cents since Oct. 29, when the average tied the old record set in 2005 of $3.157. The increase means that trucking, which burns an estimated 730 million gallons of diesel each week, paid $209.5 million more for diesel last week than a month ago.
The fuel is also 87.7 cents higher than a year ago, DOE said after its Nov. 26 survey of fueling stations.
A DOE analyst said crude oil, which has remained above $90 a barrel since Oct. 25, is the dominant driver of record diesel prices.
“The cost of the underlying crude oil, what refiners have to buy, has gone up so much that it pushes up the price of everything else,” said Laurie Falter, an analyst with the Energy Information Administration.
Crude oil futures on the New York Mercantile Exchange closed at a record high of $98.18 a barrel on Nov. 23, before dropping to $90.98 on Nov. 29. It fell as low as $90.62 during the week.
Falter said another factor driving up the U.S. diesel average was the loss of a portion of the domestic distillate supply to European buyers.
Refinery outages in Europe “were attracting some imports” from the United States in recent weeks, Falter told Transport Topics Nov. 29.
Tom Kloza, chief oil analyst for the Oil Pricing Information Service, agreed, saying, “The October and November [diesel] surges are tied in part to strong European buying.”
DOE also reported last week that the retail gasoline average slipped by 0.2 cent to $3.097 a gallon.
Gasoline is 12.1 cents below its May 21 record high of $3.218 but 85.1 cents more expensive than a year ago, according to DOE.
Commercial trucking burns about 290 million gallons of gasoline weekly.
Steve Teeple, president of Pollywog Transport, told TT that his company, which hauls refrigerated loads throughout the East Coast and Midwest, is able to save about 45 to 50 gallons of fuel per truck each week by using hydrogen injection systems, auxiliary power units, tire upkeep and performance tracking software.
Teeple said that translates into weekly fuel savings of between $154.98 and $172.20 per truck, based on retail prices.
“On the hydrogen units . . . we get about a 5% increase in mileage,” said Teeple. About half of Pollywog’s 50-tractor fleet is equipped with the hydrogen devices, which seek to boost power output by adding a small amount of hydrogen to the air-fuel mixture that is combusted inside a truck’s engine cylinders.
The APUs improve mileage by a further 5%, Teeple said.
Increased attention to tire upkeep through the use of automated inflation systems and pressure-equalization devices for tires running in a dual configuration also has boosted mileage by about 2%, Teeple said.
Pollywog, Bradenton, Fla., also uses software systems to monitor the fuel efficiency of individual trucks. Any truck getting four miles or fewer to the gallon is taken off the road for maintenance, said Teeple.
The company spends about $50,000 on fuel each week, Teeple estimated.
Johnny Baker, president of refrigerated carrier Circle City Transport, Dothan, Ala., said his company can save $2,000 to $3,000 a week on diesel costs through a truck-stop fuel purchasing program, but the carrier must still fold the cost of running the reefer units on its trailers into its base shipping rates.
“I haven’t been able to find any shippers who think those things [reefer units] need fuel,” Baker told TT. He added that each reefer unit burns about $20 in diesel per day.
Baker estimated Circle City burns about $150,000 worth of diesel in 75 tractors each week.
Bloomberg News reported that crude oil prices fell after DOE said U.S. crude supplies declined less than traders had anticipated and refinery output increased.
Crude stockpiles fell 452,000 barrels to 313.2 million barrels in the week ended Nov. 23 — 3% higher than the five-year average for this time of year, according to DOE.
In the same period, refinery output rose to 89.4% of capacity, the highest level since mid-September.
In addition, U.S. production of distillate fuels, a category that includes both heating oil and diesel, rose 122,000 barrels to 4.3 million barrels a day.
Distillate stocks, however, de-clined by 89,000 barrels, according to DOE.

Diesel Climbs 3.4¢ to $3.444

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