Diesel Dips for Second Consecutive Week
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Diesel fell for the second consecutive week, by six-tenths of a cent to $2.427 a gallon from $2.433, the Energy Information Administration reported July 27.
With the decrease, the price of trucking’s primary fuel is 60.7 cents a gallon less than it was a year ago.
Meanwhile, the average price of gasoline also dropped, by 1.1 cents to $2.175. Gasoline is 54 cents a gallon cheaper than a year ago.
U.S. average on-highway #diesel fuel price on 7/27/2020 was $2.427/gal, DOWN 0.6¢/gallon from 7/20/2020, DOWN 60.7¢/gallon from year ago https://t.co/tRHk6Ujj01 #truckers #shippers #fuelprices pic.twitter.com/NL7jsufHNL — EIA (@EIAgov) July 28, 2020
The cost of diesel decreased in eight of the 10 regions of the country surveyed by EIA, increasing in California and New England. Diesel moved up eight-tenths of a cent in California to $3.256 from $3.248. Still, diesel is 68.4 cents a gallon less expensive there than it was a year ago.
In New England, diesel increased six-tenths of a cent to $2.632 from $2.626 the previous week. Diesel is 47.4 cents less expensive in that region than at this time in 2019.
The biggest drop came along the Gulf Coast, where diesel fell 1.5 cents to $2.183 a gallon compared with $2.198 the previous week. The lowest price nationwide is in the Gulf Coast region, which is home to much of the nation’s oil and gasoline production and a large share of the refining capacity.
The West Coast, not including California, saw a drop of 1.1 cents from last week. A gallon of the fuel in that area now is $2.586 compared with $2.597 the previous week. Diesel is 60 cents a gallon less expensive there than it was a year ago.
U.S. average price for regular-grade #gasoline on 7/27/2020 was $2.175/gal, DOWN 1.1¢/gallon from 7/20/2020, DOWN 54.0¢/gallon from year ago https://t.co/bsB14wDoRC #gasprices pic.twitter.com/4xgM6sZcvc — EIA (@EIAgov) July 28, 2020
American Trucking Associations Energy and Environmental Affairs Counsel Glen Kedzie told Transport Topics that the decline in diesel prices shows that even as trucking is holding its own during the pandemic, there is an abundance of the fuel. That’s because 480,000 school buses and 36,000 privately owned motorcoaches have been parked for months because schoolchildren are staying home and the over-the-road bus industry has been crippled.
“Oil is in a state of flux right now. We don’t know when a vaccine is going to be coming, when it comes. That’s the big driver in this,” Kedzie said. “There’s been an oversupply of diesel. It’s going to be unsettled until the whole virus thing is figured out. There’s no big demand for diesel.”
Another factor stabilizing oil prices is the agreement between Russia and OPEC members to production cuts. Those nations agreed to the deal in April when oil prices plunged.
The oil-producing nations slashed production by 9.7 million barrels a day in April, about 10% of global daily supplies, and some additional cuts were promised later in the summer. But the agreement is due to expire at the end of July.
Kedzie forecasts oil will remain stable for the foreseeable future.
“You’re going to see little ups and downs. We’re in the $40-$45 bracket, which is a good place to be,” he said, referring to the price of a barrel of oil on world markets.
The weekly Baker Hughes rig count shows domestic oil production continues to fall. On July 24, the industrial service company said two more rigs shut down, and now 251 are operating in the U.S.; that represents a 73.4% drop-off from 946 a year ago.
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Baker Hughes ranks No. 73 on the Transport Topics Top 100 list of the largest private carriers in North America.
In Canada, the number of rigs operating increased by 10 to 42, compared with 127 a year ago. Still, the number of rigs operating is down 67% when compared with 2019.
Internationally, 781 rigs are operating, but 1,138 were in service last July.
The price of West Texas Intermediate crude oil, the industry benchmark, climbed to $41.75 on July 27. That’s $25 a barrel higher than it was April 20, when it closed at $16.94 a barrel — but still well below the 52-week high of $65.65.
Steve Rush, CEO of Wharton N.J.-based Carbon Express, a liquid bulk and flatbed carrier, told TT that even with the declining price of fuel, his company isn’t saving much because fuel has never been a profit center in his business.
“We look at the miles, and we charge by the mile, rather than a percentage, because what’s a percentage, a percentage of what? It’s always a crapshoot,” he said. “The only time we run into a fuel problem is when we deal with brokers. You can’t get a fuel charge on them, no way, no how. They won’t pay a fuel surcharge.”
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