Diesel Dips 5.1¢ to $2.847
Decline Is Largest Since January
By Andrea Fischer, Staff Reporter
This story appears in the Aug. 20 print edition of Transport Topics.
The national average retail price of diesel fell 5.1 cents last week to $2.847 a gallon — its largest weekly drop since January — while the gasoline average fell 6.7 cents to $2.771 a gallon, according to the Department of Energy.
A petroleum industry analyst said the falling prices reflected a drop in crude oil costs and that a tighter market for diesel was making trucking’s main fuel more expensive than gasoline.
Last week’s average price for diesel, reported by DOE after its Aug. 13 survey of fueling stations, was the largest one-week decline since a 7.4-cent fall Jan. 15, when diesel was $2.463.
“Diesel prices dropped because the cost of crude has come down some in recent weeks, and prices for petroleum products like diesel and gasoline usually reflect that kind of change,” said John Felmy, chief economist for the American Petroleum Institute.
Nevertheless, diesel prices have remained higher than gasoline since July 30, when gasoline dipped below diesel for the first time since April 16.
“Gasoline prices have dropped in the past few weeks, and they are staying lower than diesel prices right now because there is less demand for gasoline relative to diesel,” said Felmy. “There is a tighter market for diesel, so prices are not falling as much as gasoline.”
The price of diesel fuel is now 21.8 cents below the corresponding week of last year but 43.4 cents higher than the year’s low price of $2.413, set on Jan 29. Diesel has remained between $2.889 and $2.799 during the past two months.
Trucking burns an estimated 730 million gallons of diesel a week, which means the industry paid about $317 million more for diesel last week than it did at the end of January.
DOE said the gasoline average price was 22.9 cents below the same week in 2006. Gasoline has fallen 44.7 cents since May 21, when it hit a record high of $3.218. Trucking burns an estimated 290 million gallons of gasoline each week.
Keith Tuttle, president of Motor Carrier Service Inc., a truckload carrier near Toledo, Ohio, said his company saves money on fuel by controlling trucks’ idling and by searching for the best prices on bulk fuel.
Tuttle said his company has used auxiliary power units on nearly all of the trucks in its fleet for “almost a year” and has seen idling time drop “substantially.”
“Right now, we are operating with about 80% of our fleet outfitted with APUs, and we’ll have them on all of our trucks by the end of the year,” said Tuttle, whose company operates 100 trucks. He estimated that Motor Carrier Service has reduced idling time on each of its APU-equipped trucks down to 5% from 35% per truck. That savings represents about $4,000 to $5,000 per year per truck in the company’s fuel cost, said Tuttle.
To reinforce the message, “We make sure every one of our drivers is aware of what his fuel mileage average is and what the expectations are for his truck,” said Tuttle. “We have an incentive program in place with the possibility of a bonus, so drivers know that the better they can do on idling, the more they can earn on the bonus.”
Lee Klass, an owner-operator based in Portland, Ore., said he has had an increasingly hard time compensating for fuel costs in recent months.
He spends about 50 cents to 55 cents a mile on fuel, Klass said, “but there are fewer and fewer loads out there that will pay enough to compensate for that.” He said to break even and make enough of a profit to survive, “I need to make about $1.50 a mile.”
“It’s not worth taking most of the loads that are available now,” because the revenue doesn’t exceed the cost of the fuel needed to haul them, Klass said, adding that most loads are available through freight brokers, who generally do not pay fuel surcharges.
Meanwhile, crude oil rose 84 cents on the New York Mercantile Exchange Aug. 15 to $73.22 a barrel because of concern that tropical storm Dean would become a hurricane and damage Gulf of Mexico platforms, refineries and pipelines, Bloomberg News reported.
That increase was the largest gain in crude prices in the preceding two weeks. Crude oil prices have risen from about $70 on June 29.
Nearly 27% of U.S. oil production and half of the country’s refining capacity are in the Gulf of Mexico region, according to the Department of Energy.
Hurricanes Katrina and Rita knocked out oil production and damaged refining facilities when the two storms devastated the Gulf of Mexico region in 2005.
This story appears in the Aug. 20 print edition of Transport Topics.
The national average retail price of diesel fell 5.1 cents last week to $2.847 a gallon — its largest weekly drop since January — while the gasoline average fell 6.7 cents to $2.771 a gallon, according to the Department of Energy.
A petroleum industry analyst said the falling prices reflected a drop in crude oil costs and that a tighter market for diesel was making trucking’s main fuel more expensive than gasoline.
Last week’s average price for diesel, reported by DOE after its Aug. 13 survey of fueling stations, was the largest one-week decline since a 7.4-cent fall Jan. 15, when diesel was $2.463.
“Diesel prices dropped because the cost of crude has come down some in recent weeks, and prices for petroleum products like diesel and gasoline usually reflect that kind of change,” said John Felmy, chief economist for the American Petroleum Institute.
Nevertheless, diesel prices have remained higher than gasoline since July 30, when gasoline dipped below diesel for the first time since April 16.
“Gasoline prices have dropped in the past few weeks, and they are staying lower than diesel prices right now because there is less demand for gasoline relative to diesel,” said Felmy. “There is a tighter market for diesel, so prices are not falling as much as gasoline.”
The price of diesel fuel is now 21.8 cents below the corresponding week of last year but 43.4 cents higher than the year’s low price of $2.413, set on Jan 29. Diesel has remained between $2.889 and $2.799 during the past two months.
Trucking burns an estimated 730 million gallons of diesel a week, which means the industry paid about $317 million more for diesel last week than it did at the end of January.
DOE said the gasoline average price was 22.9 cents below the same week in 2006. Gasoline has fallen 44.7 cents since May 21, when it hit a record high of $3.218. Trucking burns an estimated 290 million gallons of gasoline each week.
Keith Tuttle, president of Motor Carrier Service Inc., a truckload carrier near Toledo, Ohio, said his company saves money on fuel by controlling trucks’ idling and by searching for the best prices on bulk fuel.
Tuttle said his company has used auxiliary power units on nearly all of the trucks in its fleet for “almost a year” and has seen idling time drop “substantially.”
“Right now, we are operating with about 80% of our fleet outfitted with APUs, and we’ll have them on all of our trucks by the end of the year,” said Tuttle, whose company operates 100 trucks. He estimated that Motor Carrier Service has reduced idling time on each of its APU-equipped trucks down to 5% from 35% per truck. That savings represents about $4,000 to $5,000 per year per truck in the company’s fuel cost, said Tuttle.
To reinforce the message, “We make sure every one of our drivers is aware of what his fuel mileage average is and what the expectations are for his truck,” said Tuttle. “We have an incentive program in place with the possibility of a bonus, so drivers know that the better they can do on idling, the more they can earn on the bonus.”
Lee Klass, an owner-operator based in Portland, Ore., said he has had an increasingly hard time compensating for fuel costs in recent months.
He spends about 50 cents to 55 cents a mile on fuel, Klass said, “but there are fewer and fewer loads out there that will pay enough to compensate for that.” He said to break even and make enough of a profit to survive, “I need to make about $1.50 a mile.”
“It’s not worth taking most of the loads that are available now,” because the revenue doesn’t exceed the cost of the fuel needed to haul them, Klass said, adding that most loads are available through freight brokers, who generally do not pay fuel surcharges.
Meanwhile, crude oil rose 84 cents on the New York Mercantile Exchange Aug. 15 to $73.22 a barrel because of concern that tropical storm Dean would become a hurricane and damage Gulf of Mexico platforms, refineries and pipelines, Bloomberg News reported.
That increase was the largest gain in crude prices in the preceding two weeks. Crude oil prices have risen from about $70 on June 29.
Nearly 27% of U.S. oil production and half of the country’s refining capacity are in the Gulf of Mexico region, according to the Department of Energy.
Hurricanes Katrina and Rita knocked out oil production and damaged refining facilities when the two storms devastated the Gulf of Mexico region in 2005.
