Diesel Dips 5.1¢ to $3.846, After Eighth Straight Decline

U.S. retail diesel prices declined for the eighth straight week as trucking’s main fuel fell 5.1 cents more to a national average of $3.846 a gallon, according to the Department of Energy.

Diesel has not been this low since Jan. 9, when the pump price average was $3.828. The average retail price is now 30.2 cents lower than it was on April 9, when it reached $4.148, the highest price of the year. Diesel is also 9.4 cents lower than it was at this time a year ago.

The price of gasoline, meanwhile, declined 5.7 cents to $3.612 a gallon. It was the ninth consecutive week that gasoline has fallen. In the first week of June 2011, the gasoline average was $3.781.

And prices may drop a little further because distillate inventories have increased, according to one analyst. The EIA reported on June 1 that distillate stocks rose to 120 million barrels from the 117.8 million barrels the agency reported on May 25.

“Everyone was expecting a 250,000-barrel drop in distillate inventory. Instead, we got a 2.25-million barrel increase,” said Hamza Khan, an analyst with oil trader Schork Group Inc., Villanova, Pa.

Kyle Fife, vice president at tank truck hauler Big Wyoming Trucking Inc., said he hasn’t seen much of a diesel price decline. But there’s a reason for that, he said.

“Here in the Rocky Mountains, we didn’t get hit with the type of increases when the price went up because we have refineries here,” he told Transport Topics. Fife said the price of diesel remains $4.19 a gallon in Riverton, Wyo., where his company is based.

All trucks can also fill up from the company’s 15,000-gallon diesel tank, but this fuel is priced locally, he said.

Fife said Big Wyoming still enjoys some of the lower diesel prices because many of the 18 tractors it operates leave the terminal on Monday and don’t return until Friday because their routes are so long. That means company drivers use fuel cards at various truck stops and can avail themselves of lower diesel prices in other states, he said.

Duane Baskin, operations manager at reefer hauler Glory Transportation Inc., Fayetteville, Ark., said he remains worried about when prices may climb again.

He said his company already limits trucks to 68 miles per hour, has installed auxiliary power units to minimize idling and regularly maintains tractors to get the best fuel efficiency. “There’s nothing else we can do,” he said.

Glory Transportation operates 11 company-owned trucks and employs about 40 owner-operators, Baskin said.

Fife said that low natural gas prices are affecting his business, as many natural gas wells in Wyoming have closed because prices are so low; two of his trucks used to haul crude produced by the wells, Fife said.

Those trucks now haul magnesium chloride, a mineral salt used by state road crews to control dust on county roads. While the substitute loads are OK for now, hauls of magnesium chloride end in September as the weather turns colder, Fife said.

In April, the quarterly price of compressed natural gas used as transportation fuel was $2.32 per diesel gallon equivalent, according to DOE. In January, the price was $2.38, the agency said.

There is potential for diesel to rise in coming weeks as crude oil begins to advance again, Schork Group’s principal, Stephen Schork said.

Last week, oil futures rose three days in a row, closing at $84.82 a barrel June 7 on the New York Mercantile Exchange.