Diesel Dips 4.1¢ to $4.006

This story appears in the April 1 print edition of Transport Topics.

The average price of a gallon of retail diesel declined for a fourth week in a row, slipping 4.1 cents to $4.006 per gallon, the Department of Energy reported.

The current streak of declines has reduced the price of diesel by 15.3 cents since Feb. 25, when the national average hit $4.159, its highest level in 4½ years.

Trucking’s main fuel is now 14.1 cents less expensive than a year ago, DOE said after its March 25 survey of filling stations.

Meanwhile, gasoline prices dipped 1.6 cents to $3.68 last week, putting the fuel 23.8 cents below its price a year ago. The price of gas has now fallen 10.4 cents over four straight weekly declines.

Sean Hill, an industry economist at DOE’s Energy Information Administration, said it’s “almost entirely” crude oil prices that are driving the diesel and gasoline declines.

Although West Texas Intermediate crude, the U.S. benchmark, has rebounded from a downturn in late February and early March, Brent blend, which is the benchmark in much of the rest of the world, has consistently trended downward since hitting a peak in early February.

Hill said Brent is setting the price that refiners are typically paying for crude, and thus driving prices for products such as diesel.

“I see no reason why [diesel] shouldn’t fall further, unless there’s a refinery outage or something that drives up prices,” he said.

After peaking at $118.90 on Feb. 8, Brent fell more than $10 a barrel before closing at $108.17 on March 25.

Comparing the same dates, WTI was just 91 cents cheaper on March 25, when it closed at $94.81.

Brent prices, which are driven by the world market, have moved down, in part, due to the financial crisis in Cyprus, Hill said.

Diesel’s recent decline has been a welcome change for carriers, who earlier in the year had to contend with a lag in passing higher prices on to customers through fuel surcharge agreements while prices rose 26.5 cents in the six weeks from Jan. 21 to Feb. 25.

“It certainly had a negative effect on us as an industry in the first quarter as it was rising as rapidly as it did for as many weeks as it did,” said Jim Ward, president and CEO at D.M. Bowman Inc., a dry-van and flatbed carrier based in Williamsport, Md. “It certainly creates a better environment for us on the way down.”

Ultimately, dealing with swings in fuel expenses is just part of doing business in trucking today.

“I think we all know that fuel prices have been extremely volatile,” Ward said. “As transportation executives, we’ve all learned this is probably the environment we’re going to have to continue to operate in.”

D.M. Bowman has undertaken a variety of initiatives to cut its fuel consumption.

The company limits the speed of its tractors to 63 miles per hour and has purchased in-cab, diesel-fired heaters to provide drivers with a comfortable sleeping space while reducing idling costs, Ward said.

The carrier also has equipped some of its own facilities with fueling capability and uses fuel optimization software to find the cheapest places to fill up on the road.

Ward said he’s also encouraged by the prospect of alternative fuels for trucking, adding that his company is currently exploring the feasibility of using compressed or liquefied natural gas in its fleet.

“We’re looking at it really closely,” he said.

Nebraska Transport Co., a regional less-than-truckload hauler based in Gering, near Scottsbluff, Neb., recently began outfitting some of its trailers with aerodynamic side skirts as a way to save fuel.

Tony Lacy, the company’s chief operating officer, said it’s hard to judge the exact fuel savings at this point, but he added that his company’s drivers like them. “I’ve had two or three of them say you can tell the difference when you drop one that doesn’t have skirts and hook up one that does. It just pulls so much easier.”

NTC also pulls data from its trucks’ electronic control modules to “zero in” on equipment with sub-par fuel mileage and track driver performance, Lacy said. “We really try to take all of this information on a pretty regular basis, at least monthly, a lot of times weekly, right down to the driver level.”

By looking at metrics such as over-revving, high speeds and idling time, terminal managers can sit down with drivers and educate them about how their driving habits affect the company’s bottom line, he said.

“I’m a firm believer that the driver can have the biggest impact on fuel mileage,” Lacy said.