Diesel Dips a Half-Cent to to $2.956

This story appears in the July 5 print edition of Transport Topics.

The national average price of diesel dropped 0.5 cent last week to $2.956 a gallon, the sixth decline in seven weeks, the Department of Energy reported.

Gasoline’s average, on the other hand, rose 1.4 cents to $2.757 a gallon, DOE said June 28 after its survey of fueling stations.

“Diesel is just choppy right now, after it was pushed upward last week by rising crude oil prices,” Neil Gamson, economist at DOE’s Energy Information Administration, told Transport Topics.

Diesel rose 3.3 cents a gallon the prior week, which followed five straight declines.

“Crude oil has dropped in the past few days because of global economic worries, but that is probably just a temporary blip and doesn’t change EIA’s forecast that diesel will be climbing above $3 a gallon sometime during the summer or early fall and then remain above that mark throughout all of 2011,” he added.

The price of crude oil dropped to $75.94 on June 29 on the New York Mercantile Exchange, from $78.86 on June 25.

“As for gasoline’s rise, we attribute that to the summer driving season,” Gamson said.

Diesel is 34.8 cents more expensive than a year ago, while gasoline is 11.5 cents higher than last year.

Fleet executives are still seeking ways to cut their fuel costs, where diesel seems to fluctuate much more widely than DOE’s weekly figures.

“We’ve just started a coordinated program that involved installing a new fuel storage tank in our depot that allows us to buy more than double the fuel when a website tells us to,” Neil Corder, who is in charge of sales and safety at Wayne Smith Trucking Inc., Morrilton, Ark., told TT.

The company installed the extra fuel tank two weeks earlier, Corder said, and it raised the depot’s storage capacity to 22,000 gallons.

Wayne Smith runs 96 tractors and 430 trailers, mainly east of the Rocky Mountains, Corder said, with paper products making up 70% of cargo. He said he aims to supply 30% of the fleet’s fuel needs from its depot storage.

“First, by buying wholesale, we save about 12 to 15 cents per gallon, and that is roughly on 15,000 gallons per week from our depot,” Corder said.

“I also monitor where my drivers buy fuel, practically on a daily basis,” he said. “Just recently, two guys filled up their tanks only 20 miles from the depot. I called both in.”

Lyons Heyman, president of 7 Hills Transport, Cartersville, Ga., rigidly adheres to fuel surcharges.

“We have a mandatory fuel surcharge, and we update it weekly,” Heyman told TT. “Our fuel surcharge is sometimes based on miles, but with our less-than-truckload freight, we base it on a percent of the revenue. For example, if the load costs $1,000, we’d add 20% fuel surcharge, or $200.”

He said if a shipper did not offer a surcharge, he would depend on his staff to calculate whether the rate paid enough to cover the surcharge.

“We have to work real hard that all of our people taking jobs understand the fuel surcharge,” Heyman said. “We have an acceptance level and a goal level in surcharges, where, just to use numbers, say our goal is 25 cents per mile and our acceptance level is 23 cents.”

Employees who consistently get the goal-level loads are rewarded with bonuses, he said, but he does not give bonuses to drivers based upon fuel performance.

“Instead, every month we give them a report on fuel efficiency, and we rank them,” Heyman said. “They take great pride, and they don’t want to be [the] low man.”

He said that he calls drivers in the lower range “to come in and talk to our fuel people and explain, and we try and counsel them.”

The company operates 90 tractors and 250 trailers, driving mostly routes of 750 to 800 miles, Heyman said.