Diesel Declines 2.5¢ to $3.81 For Fourth Consecutive Drop

The national average price of retail diesel declined for the fourth consecutive week, dipping 2.5 cents a gallon to $3.81, the Department of Energy reported.

The average has declined 13.9 cents over the past four weeks to the lowest level since Feb. 28, DOE said after its Aug. 22 national survey of 350 fueling stations. Although diesel is now 31.4 cents below a nearly three-year high set in early May, it is still 85.3 cents a gallon higher than a year ago.

Likewise, the U.S. regular gasoline average dropped 2.3 cents to $3.581 a gallon, the third consecutive decline after five weeks of gains. Gas is 38.4 cents below the price on May 9, the highest price since 2008. Gasoline sold for $2.704 a gallon one year ago.

Neil Gamson, an analyst with DOE’s Energy Information Administration, said the declining cost of diesel is “following the crude oil price path.”

The economy’s slow growth has put a brake on demand for oil products, creating “not as much upward pressure on prices,” Gamson said.

Crude oil futures on the New York Mercantile Exchange remained relatively stable in recent weeks, closing at $85.30 on Aug. 25.

Crude dipped to its lowest level in a year on Aug. 9, hitting $79.30 after hovering just under $100 in late July.

The volatility of diesel prices continues to challenge motor carriers.

“I know the price of fuel is up and down, and there’s no sense in trying to time the market because of our capacity situation,” said Peter Daniels, an account manager who purchases fuel for truckload carrier R.S.D. Transportation Inc., White River Junction, Vt. “So I’m kind of at the mercy of the market price.”

Daniels said that R.S.D., which runs 85 trucks mostly throughout the Northeast, does not like to buy in bulk because of the economic downturn in recent years.

“We just don’t want to tie up too much in bulk storage,” he said.

Instead, Daniels said the carrier attempts to pay all its fuel bills within 10 days after it receives an invoice.

“If we stay within a 10-day pay, we get an additional 2% off,” Daniels added. “We try to take advantage of that as much as we possibly can.”

R.S.D. is in the process of installing auxiliary power units on its trucks and has a “regimented” maintenance schedule so its vehicles operate efficiently.

In addition, Daniels said the carrier is in talks with one of its customers to purchase three natural gas vehicles.

“That will kind of smooth out the rises and the dips in the energy market for us,” he said.

Daniels said the customer, a commercial laundry account, is converting its plant to natural gas.

“In the process, the customer is going to be adding some fueling infrastructure,” Daniels said. “So our trucks will be able to refuel at his location.”

Tim Cowen, president of truckload carrier Cowen Truck Line Inc., Perrysville, Ohio, said his company buys fuel in bulk, receives discounts at three large truck-stop chains and engages in fuel hedging.

“You have good months, and not as good months,” Cowen said of the hedging.

He said 95% of the company’s fleet of 70 tractors and 200 trailers has idling reduction devices, and about a third of its units are equipped with super single tires.

The carrier also gives bonuses to drivers who meet company miles-per-gallon targets.

In addition, the carrier employs technologies that monitor drivers and trucks for such factors as idling time, out-of-route miles and cruise control use.

Kelle Simon, owner of Kelle’s Transport Service, Salt Lake City, has installed APUs on all of its 150 tractors.

Kelle’s, a 100% refrigerated frozen truckload carrier, operates in 48 states and the Canadian provinces of Ontario and Alberta, Simon said.

“We run all negotiated fuel stops — a negotiated, closed fuel network,” Simon said. “Our fuel cards are only authorized where we have discounted rates. We run fuel optimizers, we tell the driver where to stop and we plan his trip for him.”

Looking ahead, EIA’s Gamson said diesel probably will “continue to fall during the shoulder months of September and October, then head back up during the heating season, when diesel competes with heating oil.”

One potential complication, however, could be the impending hurricane on the East Coast and some recent refinery shutdowns in the Midwest, said Phil Flynn, a senior energy analyst for PFGBEST Research, with headquarters in Cedar Falls, Iowa, and Chicago.