Diesel Dips 0.7¢ to $3.974
This story appears in the Sept. 23 print edition of Transport Topics.
National diesel prices dipped by 0.7 cent a gallon last week to $3.974, on average, the Department of Energy said, leaving trucking’s main fuel about midway between its high and low points for this year.
Diesel had increased for three straight weeks for a combined total of 8.5 cents a gallon before hitting a rare week of no change earlier this month.
The current retail average compares with $4.135 a year ago, DOE’s Energy Information Administration said. The 12-month low for diesel was $3.817 on July 1.
Gasoline fell 4 cents a gallon to $3.547 on Sept. 16. It was the second straight weekly decline after two increases. A year ago, the gas average price was $3.878.
U.S. crude oil futures prices remained high but retreated below the $110 level from early September. An EIA analyst said oil prices probably will drive diesel above the $4 threshold through the end of October before it dips into the $3.90s in November and December.
“Right now in diesel, we’re seeing that it’s driven by crude oil prices,” said EIA’s Timothy Hess, who added U.S. refineries are working well now, but the crude oil increases that started in late August “still have to work their way through from the wholesale level to retail.”
Hess said refiners are building supplies of heating oil for the winter, putting supply pressure on diesel fuel. Hess also said strong diesel exports to Latin America probably will keep the cost of trucking’s main fuel from dipping significantly.
Analysts at GasBuddy.com said gasoline prices should drop 20 cents to 25 cents per gallon between now and the end of October because the prime summer driving season has ended.
On the New York Mercantile Exchange, crude closed at $106.39 a barrel Sept. 19. The year-to-date peak was $110.53 on Sept. 6.
Fleet executives said coping with the prices is a constant challenge.
“It’s one of our biggest expenditures, a huge expense. We try to save a few cents wherever we can,” said Tom Treadwell, information technology manager for JA Trucking in West Newton, Pa. The company is a regional truckload carrier of general commodities, and Treadwell said the drivers of its 27 tractors have become key to the strategy for fighting prices.
“We offer incentives to them. We tell them what the national average price is on their Qualcomm units, and they get to keep half of the savings for fuel purchased below the national average,” he said. “It’s our most aggressive approach.”
Even with drivers scrounging in earnest, the company still spent $138,000 on diesel in August.
Treadwell also said the company is looking at pricing based on weight, as lighter truckloads roll along the highways at 6 or 7 mpg, whereas heavy loads move at 4 or 5 mpg.
A North Carolina manger at MCO Transport in Wilmington said he is concerned about engine idling at his fleet. The company offers incentives to terminal managers.
“We were over 22% idling time and are now down to about 10%,” said Randy McIntyre, vice president of operations for MCO. “That’s a huge issue. Reducing speed is also a factor; it’s helping safety and cutting fuel use,” he said.
A new report by the North American Council of Freight Efficiency showed that fleets that adopt technologies or practices to help boost fuel efficiency can save more than $1,400 per tractor per year.
On the inventory front, U.S. crude production rose 1.1% to 7.83 million barrels a day, according to EIA data. Output has surged to the highest level since 1989 as the combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies trapped in shale formations in the central part of the country.
“We are in the midst of a remarkable uptrend in U.S. oil production,” said Tim Evans, an energy analyst at Citi Futures Perspective.
Staff Reporter Michael G. Malloy contributed to this story.
