Diesel Declines 1.9¢ to $3.894
By Michael G. Malloy, Staff Reporter
This story appears in the July 21 print edition of Transport Topics.
The U.S. diesel average declined 1.9 cents to $3.894 a gallon, while the gasoline price posted its biggest downturn in nine months, the Department of Energy reported July 14.
Diesel’s decline was the second straight. Gasoline slid 4.3 cents to $3.635 a gallon — the biggest decline since it fell 6.6 cents Oct. 28.
Gas, which fell almost 7 cents in the past two weeks, was at its lowest level since early April. The motor fuel jumped more than 40 cents from February through late April, when it topped out at $3.713, the highest price in more than a year.
The declines left diesel 2.7 cents higher than the same week last year and gas less than a penny below the corresponding week a year ago, DOE said after its weekly survey of filling stations.
The downturns were in tandem with lower oil prices, which briefly dipped below $100 a barrel last week for the first time since May.
“More than anything, it’s been the drop in the cost of crude oil” that’s pushed pump prices down, said Phil Flynn, senior market analyst with Price Futures Group in Chicago.
“It’s been a nice break, and I think there’s a little seasonality involved, too, with demand dipping after the Fourth of July,” Flynn told Transport Topics on July 17, though he noted that oil had since bounced back by several dollars a barrel.
“We’ve seen very strong diesel production out of U.S. refineries,” he said, but “the problem is we’re not keeping it all, because of exports. My sense is the diesel prices are pretty close to where they’re going to be for a while.”
One Utah-based trucking company executive said last week that his company is using multiple means to streamline fuel costs.
“Our main focus is testing new aerodynamic features” on trucks to reduce drag, said Brecken Cox, chief operating officer for Parke Cox Trucking Co. in St. George, Utah.
“I can’t say I watch the prices like a hawk, but we purchase fuel for our yard,” which also cuts costs, Cox told TT. “We have big enough tanks that if we’re running the 11 Western states, we generally can fuel our fleet here.”
Parke Cox is a truckload carrier with 75 trucks.
For on-road fueling, the carrier uses bulk-buying deals to get preferred pricing at truck stops, Cox said.
“We can usually get a better price than on the open market,” he said. “It’s amazing how well our guys will adapt. . . . Now, we can communicate with them where they’ll get a better price.”
An energy industry official said last week that U.S. refineries have been boosting their diesel output, in part to meet high international demand.
“The future in the export markets really needs to be in the distillate streams,” which include diesel, said Terry Higgins, executive director of refining and special studies at Hart Energy.
“There’s been a tremendous growth in distillates,” as more U.S. shipments of diesel have gone to Latin America and Europe, he said at a conference in Washington sponsored by DOE’s Energy Information Administration.
“Distillate is going to be a key export, because the world is moving toward [more use of] ultra-low-sulfur diesel,” Higgins said during a July 14 conference panel.
Crude oil futures closed at $99.96 a barrel on the New York Mercantile Exchange on July 15 — the first time since May that oil finished a Nymex trading day under $100.
The price climbed in the following two days, closing at $103.19 a barrel July 17, Bloomberg News reported.
U.S. oil production, meanwhile, rose to almost 8.6 million barrels a day for the week, the highest level since 1986, DOE said in a report released July 16.
Refineries’ run rates were at 16.6 million bbd — the most in DOE’s weekly data going back to 1989 — while operating at 93.8% capacity, the highest level since August 2005, DOE said in its weekly supply report.
