Diesel Dips 1.3¢ to $3.857

This story appears in the Nov. 11 print edition of Transport Topics.

The average price of a gallon of diesel dipped 1.3 cents to a four-month low of $3.857 last week, while gasoline fell to its lowest level of the year, the Department of Energy reported.

Analysts said prices are falling as unsustainably high crude oil prices continue to ease, but strong domestic and global demand for diesel is resulting in smaller declines than for gasoline.

Diesel has dropped 12.4 cents over the past two months and is at its lowest level since July 8, DOE said after its Nov. 4 survey of fueling stations.

Gas dipped 2.9 cents to $3.265, the eighth decline in nine weeks and the lowest price since Christmas. It has plunged 34.3 cents over the past two months.

Trucking’s main fuel is 15.3 cents below the same week last year, while gas is 22.7 cents lower. Diesel was coming off a four-year high of $4.15 a gallon at this time in 2012.

The downturns continued as crude oil fell to its lowest price in five months, near $93 a barrel on the New York Mercantile Exchange. Oil had gone above $110 a barrel in early September, which was the highest price in more than two years.

“The drop in crude has helped lower prices, and there’s probably a little more catching up to do with some further downward drift” in diesel’s pump price, said Tom Kloza, chief analyst at the Oil Price Information Service.

Diesel has not been falling as fast as gasoline because of the impending onset of winter, when diesel and heating oil compete for distillate stocks, Kloza said.

“Strong global demand for diesel fuel and other distillates is resulting in high prices for these products,” even as higher refinery output has led to lower gasoline prices, DOE said in its “This Week in Petroleum” report.

Another buffer to faster-falling diesel prices has been U.S. diesel exports, which are at a “near-record high,” Kloza said, with the most recent DOE figures showing exports of about 1.4 million barrels a day.

“There’s a huge export market from the [U.S.] coasts to Asia and Europe,” he said.” If you’re within 100 to 200 miles of the coast, you’ll probably see prices lifted by the global market.”

A trucking executive told Transport Topics that his company takes many different steps in an effort to reduce total fuel costs.

For starters, Patrick Coughlin, terminal manager for Pittsburgh-based truckload carrier Reinsfelder Inc., said his company uses auxiliary power units on all of its 150 trucks to save money on fuel.

“We’ve been doing it for about two years and have seen big benefits,” Coughlin said. “Usually a tractor burns about a gallon of diesel per hour. With [an APU], it’s minimal.”

The company also fuels trucks at its five terminals to save on retail costs, keeps its trucks in a range of 65 mph to 72 mph and has drivers keep their engine rpm down to boost efficiency.

Reinsfelder has about 40 trucks in its company fleet and uses 110 owner-operators in its nationwide operations.

DOE, meanwhile, reported last week that, while crude supplies rose for the week ended Nov. 1, distillate and gasoline supplies both declined.

Oil inventories gained 1.6 million barrels, less than the 2.1 million- barrel increase forecast by analysts, Bloomberg News reported.

Gasoline and distillate stockpiles plunged, by 3.8 million and 4.9 million barrels, respectively, DOE said Nov. 6.

The gasoline draw was more than nine times Bloomberg analysts’ median estimate, while distillates were forecast to drop by 1.5 million barrels.

Demand for the two fuels also increased, with diesel demand up by about 350,000 barrels and gasoline up about 240,000 barrels for the week, the department said.

After finishing at a five-month low $93.37 a barrel Nov. 5, crude oil closed at $94.20 on the New York Mercantile Exchange on Nov. 7, Bloomberg reported.