Diesel Continues to Climb on Increasing Global Oil Demand
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The U.S. Energy Information Administration’s weekly survey published Dec. 7 showed trucking’s primary fuel increased 2.4 cents nationwide and now costs $2.526 a gallon.
Diesel, which has risen every week in November and now into December, is still 52.3 cents less expensive than it was a year ago.
Also, the nationwide price of gasoline rose 3.6 cents a gallon to settle at $2.156. Still, it costs 40.5 cents less than it did at this time a year ago.
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Much of the price decrease for fuel took place during the first half of the year when demand began plummeting because of stay-at-home orders in the wake of the coronavirus pandemic. According to EIA, diesel rose in nine of 10 regions — dipping only along the West Coast (not including California), where the decline was 1.8 cents to $2.724. That’s down 59.9 cents from a year ago.
The biggest increase was in the Central Atlantic, where the price rose 3.6 cents per gallon to $2.779. Diesel there is 46.2 cents less expensive than a year ago.
The smallest increase was in the Rocky Mountain region, where diesel ticked up one-tenth of a cent to $2.541 a gallon. Diesel is 66.6 less expensive there than it was a year ago.
The most expensive diesel remains in California, where the price increased by 2.3 cents per gallon to $3.311 but is 59 cents a gallon less expensive than in 2019.
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The least expensive diesel remains in the Gulf Coast region, home to much of the nation’s oil production and refining capability. There, diesel rose 2.2 cents per gallon to $2.276. In that region, diesel is 48.3 cents per gallon less expensive than it was a year ago.
The increase in diesel and gasoline prices is in tandem with a jump in oil prices on world markets.
West Texas Intermediate crude, the industry’s benchmark, closed at $45.76 a barrel Dec.7, which is up $8.95 a barrel from its close of $36.81 on Nov. 2. That closing price also puts oil up 5 cents a barrel from its most recent high of $45.71 on Nov. 25.
As oil prices rise, the number of oil rigs operating in the U.S. is creeping up, according to the Baker-Hughes weekly oil rig count.
The week ending Dec. 4, 323 rigs were in operation, up three from the previous week but down 476 from the same period a year ago when 799 were in operation.
The rise in fuel prices isn’t having an impact on the bottom line of tank truck and flatbed carrier Carbon Express in Wharton, N.J.
Rush
CEO Steve Rush told Transport Topics that several years ago, he changed his company’s business model and began charging customers for the time drivers spend behind the wheel rather than the number of miles they spend driving. Carbon Express does have a fuel surcharge.
“You don’t want fuel to be a profit center, you just want to recoup the cost of the fuel. Everybody sees it. Every day you pick up the paper, has fuel gone up or has fuel gone down? Everybody sees it, that’s easy to sell,” Rush told TT. “Charging a percentage is hidden, you don’t know what’s coming at you. It was the right move for us. We’re staying that way.”
Rush said shippers and receivers he works with have a clearer idea of what he’s charging for fuel and, he said, it has brought him additional business.
This spring as the tanker truck business slumped with the decline in transporting petroleum products such as motor oil, diesel and gasoline, Rush added eight flatbeds to his fleet of 160 tankers. He said that decision paid off.
“When they shut the country down for two months, no one had any gas, and no one had any oil to ship,” Rush said. “I had some existing customers that used flatbeds, and they said yes, they’d do business with me. We’re not getting rich with it, but it really built up the spirit of my employees because they knew we’re going to fight the battle, keep moving forward and do whatever it took. It was a morale booster.”
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