Diesel Down 0.3¢ to $2.772 After Fifth Straight Decline

This story appears in the Dec. 14 print edition of Transport Topics.

The U.S. diesel average inched down another 0.3 cent to $2.772 a gallon last week, the fifth straight decline, the Department of Energy reported.

The national average has now fallen 3.6 cents since hitting a high for the year of $2.808 on Nov. 2, DOE said after its Dec. 7 survey of fueling stations.

Despite the declines, diesel is now 25.7 cents higher than a year earlier, the third straight week in which the average has topped 2008 levels.

Gasoline rose for the second time in the five weeks, trickling up 0.5 cent to $2.634, DOE reported. The retail gas average fell 6 cents in the five weeks through Dec. 7, and the most recent bump up left it 93.5 cents above the corresponding week of last year.

The recent price movements — as well as the elevated levels from a year ago — are directly related to crude oil prices, which are markedly higher than last December, noted Tom Kloza, chief analyst at the Oil Price Information Service.

“In the last 90 days, crude has been dictating all the downstream products, and much as people want to blame the refiners, they are making as little as they can while still operating,” he told Transport Topics.

Crude futures plunged almost $5 a barrel last week on the New York Mercantile Exchange, closing at $70.54 on Dec. 10, a two-month low, Bloomberg News reported.

However, “by the middle of this month, we’ll be looking at crude oil prices twice as high as a year ago,” Kloza said Dec. 7, noting that the last time that that happened was in 2000, when oil was coming off $10 a barrel.

On Dec. 19, 2008, oil closed at $33.87, according to Bloomberg News. It’s most recent high point was $81.37 on Oct. 21.

One trucking executive said his fleet has used auxiliary power units in its fleet for three years to help reduce fuel expenses.

“Rates are obviously depressed, so we are managing by pennies, not nickels and dimes,” said Earl McCardle, president of Fanelli Brothers Trucking, Pottsville, Pa.

He said the APUs are particularly helpful at saving fuel from trucks idling at loading docks. In addition, he said bulk purchases also help the 84-tractor regional truckload fleet save compared with retail prices.

“We can buy from the cheapest supplier, which is typically anywhere from 8 to 10 cents below on-road” fuel, McCardle said.

Truckers in New England — where diesel’s $2.874 average last week was more than 15 cents over the national figure — are eligible for grants if they add fuel-saving or emission-reducing equipment, according to the nonprofit firm managing the funds.

Cascade Sierra Solutions has about $1 million available for New England truckers via the federal stimulus-funded Diesel Emissions Reduction Act, according to Cascade’s Portland, Ore., branch manager Doug Pentecost.

Truckers are eligible for grants up to $1,000 per reduction system for adding anything from APUs to SmartWay-approved tires, Pentecost said.

SmartWay is a voluntary U.S. Environmental Protection Agency program that encourages shippers and freight carriers to reduce emissions through more efficient operations. There will be a total of about $300 million in DERA funding available nationwide, according to EPA.

“The rebates are based on the technologies,” Pentecost said. “Once qualified, a certificate is mailed out and the customer gets an instant rebate” from the technology or system installer, who is then reimbursed through the program, he said.

Meanwhile, DOE said last week that diesel will average $2.96 a gallon in 2010 — a 2-cent increase from its November prediction.

Diesel will average $2.46 this year, DOE’s Energy Information Administration said in its monthly short-term energy outlook released Dec. 8.

Gasoline will average $2.65 this month, unchanged from November, but almost $1 over last December. Its average will jump 48 cents to $2.83 next year, EIA said.

Oil will rise to an average $78.67 per barrel next year, DOE said.