Diesel Declines 5.5¢ to $3.887

This story appears in the April 29 print edition of Transport Topics.

Retail diesel prices declined for an eighth consecutive week as the national average reached its lowest point since Aug. 6 after dipping 5.5 cents to $3.887 a gallon, the Department of Energy reported.

Diesel has now declined 27.2 cents since Feb. 25, and was selling for 19.8 cents less than it was the corresponding week last year, according to DOE’s April 22 survey of 350 diesel filling stations.

Gasoline, which sold on average for $3.536 a gallon last week, also has fallen the past eight consecutive weeks; it slipped by 0.6 cent last week. One year ago, the gasoline average was $3.87.

“Refinery utilization rates are at their annual high, and basically, refineries are getting cheaper crude oil than they were getting six or seven weeks ago,” said Sean Hill, an economist with the U.S. Energy Information Administration. “That gives us cheaper diesel.”

Meanwhile, the price of crude oil has remained at less than $90 a barrel since mid-April, though it ticked up slightly last week, closing at $93.64 a barrel on the New York Mercantile Exchange on April 25. Crude sold for $104.12 a barrel a year ago.

Hill said the price decline in diesel was primarily related to falling crude oil prices the past few months and an increase in refinery capacity after facilities that were down for maintenance since February came back online.

“We’re probably a week or two behind some of the falling crude oil prices for the drop to reach retail diesel prices,” Hill added.

Distillate stocks, while lower than in recent years because of increased exports and slightly less demand, remain in the normal range, Hill said.

Despite the decrease in the cost of diesel, fuel remains a top concern for Pasadena, Texas-based Clark Freight Lines Inc., said general manager David Schnautz. Clark hauls general freight nationwide and has 130 power units and 186 trailers.

Like many other carriers, Clark gets purchase discounts at truck stops, buys fuel in bulk, has aerodynamic trucks and trailers, and deploys auxiliary power units and super single tires on its equipment, Schnautz said.

“And we try to choose a route with cheaper fuel and cheaper fuel taxes,” he added. “If we can go around a state with high taxes, then we’ll do that.”

For instance, Schnautz said, if company trucks travel from Texas to Indianapolis, they generally will try to avoid going through Illinois, which has higher fuel taxes.

“There’s up to 20 cents difference in some states,” he said.

“We may choose to go through Tennessee, up through Kentucky and Indiana, instead of going through Illinois,” Schnautz said.

For West Coast Carriers, based in Port Orchard, Wash., the greatest fuel saver is planning ahead, attempting to consolidate its freight, said owner Brian Schuster.

West Coast Carriers, which hauls mostly flatbed and refrigerated freight nationwide, has about 120 trucks and trailers.

“Fuel is always going to be an issue, no matter what you do,” Schuster said. “It’s there; it’s viable. There’s nothing you can really do about it.”

However, when company trucks travel west to east, employees attempt to squeeze in as much freight as possible, which not only saves on fuel but also keeps the company’s rates down, he said.

“As far as full truckload, planning is everything — planning and communication,” Schuster said. “Our stuff is planned the moment the truck is loaded, sometimes before.”

West Coast’s drivers also are required to check their tire pressure before each trip, he said. “One of the simplest things you can do is maintain tire pressure,” Schuster added.

In a related fuel development, Natso and other associations representing petroleum marketers and retailers filed a protest last week with the Federal Energy Regulatory Commission, objecting to a recent decision by Enterprise TEPPCO to halt interstate shipments of ultra-low-sulfur diesel fuel on its pipeline, effective July 1.

The associations are concerned that stopping the flow of ULSD shipments could create a shortage in some of those markets, causing an increase in diesel prices.

Enterprise TEPPCO said last month it is terminating shipments of ULSD because of “the continued decline in volumes nominated by shippers.”

The pipeline originates in Baytown, Texas, and runs through Louisiana, Arkansas, Missouri, Illinois, Indiana, Ohio, Pennsylvania and New York.

The company said there will not be an effect on intrastate transportation of ULSD in Arkansas, Texas, Louisiana and Ohio.