By Frederick Kiel, Staff Reporter
This story appears in the Dec. 7 print edition of Transport Topics.
The average price of U.S. retail dipped 1.2 cents to $2.775 a gallon last week, the fourth straight decline. The fuel, however, remains just 3.3 cents below the high for the year, the Department of Energy reported.
The average price is now 16 cents above year-ago levels, only the second time in the past 57 weeks that current prices have exceeded comparable levels of the year before.
At the same time, DOE reported after its Nov. 30 survey of filling stations, that the average price of retail gasoline dropped a penny to $2.629 a gallon, its third slide in four weeks.
Gasoline is now 81.8 cents a gallon more expensive than it was in the comparable week of 2008, according to DOE.
Current diesel prices crossed last year’s level on Nov. 23, when it was 12.3 cents more expensive than the same week in 2008. For 55 straight weeks — Nov. 3, 2008, to Nov. 16 — diesel was cheaper than the same time the year before.
The largest price gap came on May 25, when the diesel average was $2.274 a gallon, compared with $4.723 a gallon, or $2.449 more, in the corresponding week of 2008.
“The reason for that run of 55 straight weeks is what occurred last year, not this year,” said Neil Gamson, economist at DOE’s Energy Information Administration. “We had a phenomenon of rapidly rising prices for all commodities, including crude, through the first half of 2008, and then crashing prices through the rest of that year when the recession hit, which then remained fairly low through much of this year.”
Brian Kinsey, president of James Brown Trucking Co., Lithonia, Ga., said the rapid run-up in prices of more than 20 cents a gallon from Sept. 28 to Nov. 2 affected his company, but the 3.3-cent drop over the past four weeks had no effect.
“Diesel has to move at least 5 cents a gallon to affect my fuel surcharges and other fees,” Kinsey told TT. “We buy on the bulk market and had to be a lot more careful during that price spurt in the fall.”
Since the average retail diesel price hit its high to date for 2009 at $2.808 a gallon on Nov. 2, it has fallen by minute amounts each subsequent week: 0.7 cent, 1.1 cents, 0.3 cent and 1.2 cents.
Kinsey said Brown Trucking operates about 450 tractors, including owner-operators and company drivers, and 2,650 trailers.
“This decrease over the past month has not been significant in any way,” Kinsey added.
“We haven’t seen much variance in the spot market, so that this de-crease has been neither good nor bad for us,” he explained.
Meanwhile, Ron Planting, an economist at the American Petroleum Institute, told Transport Topics that the trend in prices for both diesel and gasoline in recent weeks has been in the same direction, and it all has to do with the No. 1 factor — the price of crude oil.
EIA’s Gamson agreed.
“Crude oil has been bouncing around in the . . . [$70-$80 a barrel range] for the past month since falling from its high of the year [$81.37 on Oct. 27]. And as it’s come down a few cents a barrel, diesel is dribbling down as well,” he said.
Crude closed at $76.46 a barrel on Dec. 3 on the New York Mercantile Exchange.
Gamson added that strong distillate stocks have also helped to push diesel down, even though the United States is entering winter, when demand for heating oil, which also comes from distillates, rises. Total distillate stocks were 165.7 million barrels on Nov. 27, DOE said, the highest for the final week of November since figures were tracked in 1983. A year ago, distillate stocks stood at 125 million barrels.
