December 10, 2007 7:45 AM, EST

Diesel Dips 2.8¢ to $3.416 a Gallon

DOE Cites Lower Demand

By Dan Leone, Staff Reporter
This story appears in the Dec. 10 print edition of Transport Topics.
The average price of retail diesel slipped below its record high last week, dipping 2.8 cents to $3.416 a gallon, the U.S. Department of Energy reported, citing a decline in demand for distillate fuels.
Despite the dip, diesel is still 79.8 cents higher than it was a year ago, DOE said Dec. 3 after its weekly survey of filling stations.
“In the last couple of weeks, we’ve seen some decline in distillate demand,” said Laurie Falter, an analyst with DOE’s Energy Information Administration.
Falter told Transport Topics that DOE data showed U.S. distillate demand last week at about 4.4 million barrels a day, down about 351,000 barrels a day since the week ended Nov. 23. However, the current figure was 246,000 barrels a day more than it was in the corresponding week in 2006.
Falter said DOE measures distillate demand by examining the quantity of the fuel supplied by U.S. refiners, adding the total barrels of imported distillates and subtracting any U.S. exports.
Also last week, DOE said the average retail gasoline price fell 3.6 cents a gallon to $3.061, the largest decline since Aug. 13. Gas has risen 26.5 cents since Labor Day and is now 76.4 cents higher than the corresponding week of 2006.
The high fuel prices mean that the trucking industry, which consumes about 730 million gallons of diesel and 290 million gallons of gasoline each week, paid about $804 million more last week for its fuel than it did in the corresponding week in 2006.
Trucking companies said they are insulating themselves from high diesel costs by buying fuel in bulk and closely tracking drivers’ diesel purchases on the road through fuel-card programs.
Danny Glover, president of GTL Transport Co., told TT Dec. 5 that his regional intermodal carrier saved about 20 cents a gallon through its latest bulk fuel purchase.
“Buying in volume is always the better way to go, unless prices are falling,” Glover said.
He also said the company was looking into rolling out bonus incentives for drivers who meet fuel efficiency targets.
Glover added that GTL, Norfolk, Va., has had to double its fuel purchases in recent weeks to meet the seasonal demand from customers, whose containerized loads of holiday freight began arriving by ship earlier in the fall.
Still, Glover said that the company’s fuel surcharge — currently set at 31% of GTL’s base rates — “is the only reason we’ve been able to” cope with the seasonal upswing that hit even as diesel soared to record levels in October and November.
Joe Cione, who handles recruiting for truckload carrier Vanguard Transportation Systems, West Chester, Ohio, said his company has been able to save about $20,000 a year in fuel costs by monitoring driver purchases on the road via the company’s fuel-card program.
Cione said that by monitoring where drivers make their purchases, the company can keep track of the fueling stations with higher prices and advise drivers to avoid them.
He estimated Vanguard’s 40-truck fleet spent an average of $3.207 a gallon for diesel the past month, 20.9 cents below the national average.
Meanwhile, crude oil prices in New York last week fell to their lowest levels since the end of October after DOE’s weekly fuel inventory report showed that gasoline inventories in the week ended Nov. 30 rose 3.99 million barrels to 200.6 million barrels, Bloomberg News reported.
Crude oil closed at $87.46 a barrel on Dec. 5 after rising earlier that day on news the OPEC oil cartel decided to leave its production targets unchanged, Bloomberg said.
The Dec. 5 close was the lowest since Oct. 24. It rose above $90 the following day.
EIA’s Falter noted it takes “about three to six weeks” before lower crude oil prices are fully reflected in the price of refined fuels like diesel.

Diesel Dips 2.8¢ to $3.416 a Gallon

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