Diesel Drops 3.2¢ to $2.924 a Gallon

This story appears in the July 12 print edition of Transport Topics.

The U.S. retail diesel average dipped 3.2 cents to $2.924 last week, the seventh decline in eight weeks, the Department of Energy reported.

Gasoline also declined, retreating 3.1 cents to $2.726 a gallon, its sixth decrease in those same eight weeks, DOE said July 6 after its survey of fueling stations.

“Retail prices are dropping because basically, we have a good oversupply of fuel stocks right now,” Phil Flynn, chief energy analyst at the brokerage firm PFGBest, Chicago, told Transport Topics.

“Refiners built up gasoline production for the July 4 holiday weekend, and distillate production grew by default, even if it wasn’t needed, and put downward pressure on prices,” Flynn added. “The manufacturing sector also eased up a little bit, and that meant less goods had to be moved by trucks and planes.”

Diesel has fallen 20.3 cents a gallon since May 10, while gasoline has dropped by 17.9 cents over that span, DOE figures show.

Despite those declines, diesel is still 33 cents a gallon higher than the corresponding period of last year, and gasoline is 11.4 cents above its year-ago level.

Crude oil also dropped last week, closing at $74.07 a barrel on the New York Mercantile Exchange on July 7, down from $78.86 a barrel on June 25.

One trucking company said that a focus on hiring appropriate drivers is an important part of its overall strategy for saving on fuel.

“We hire younger drivers that have a great attitude and enthusiasm, as well as mechanical aptitude,” Tom Walter, safety director, driver supervisor and head trainer for Jones Bros. Trucking Inc. in Missoula, Mont., told TT.

“We don’t want experienced drivers who . . . refuse to learn new ways,” Walter added.

Jones Bros. is a nationwide flat-bed carrier with 40 of its own tractors and 11 owner-operators.

Walter said that he trains new drivers in a 10-day course he devised to teach them how to drive safely and efficiently.

“We’ve been able to raise our fuel efficiency by 2 miles per gallon in many cases, which adds up to a lot of money,” Walter said, adding, “We have drivers getting 8 miles per gallon, even 8.3 and 8.4.”

Walter said such drivers get a monthly bonus of $800 or more — meaning that the company also saves the same amount on each truck.

“We also have a bunch of drivers in the 7-mile range — 7.3 or 7.5 — and they’ll get $500 bonus checks,” he said. “Young drivers don’t know anything about the old freewheeling days of trucking, and they just think all the new rules and fuel-saving techniques are normal.”

Steve Rush, president of tanker carrier Carbon Express Inc., said that it is important for the carrier, which is based in Wharton, N.J., to work with customers who understand the significance of changing pump prices.

“What we’ve done is to make sure that we’re dealing with customers who are willing to recognize the cost and volatility of fuel and are willing to compensate us,” Rush explained, adding, “We won’t do business with companies who don’t understand this, and in return . . . we don’t want to look at the surcharge as a profit center.”

From its New Jersey base, Carbon Express runs 48 tractors and 68 tankers on routes east of the Mississippi River.

Rush told TT that he also had recently installed super-single tires on his tractors.

“Those super-singles have saved us 1% to 2% in fuel costs and definitely have been an improvement,” he said.

Rush said he has turned over nearly all of his fleet to day cabs, both to save fuel and to retain good drivers.

“If your driver is on the road five nights a week, it’ll take at least five gallons of diesel to run the cab each night,” Rush said. “We instead put our drivers into motels, which is easier on the driver, saves fuel and wear and tear on the truck.”

Rush said the day-cab policy saved the company money by retaining drivers who had both the best fuel efficiency and the best safety records, though he couldn’t put a number to the savings.

Also last week, DOE’s Energy Information Administration said in its most recent short-term energy outlook that diesel fuel would average $2.98 a gallon for all of 2010 — up 2 cents from its prior forecast.

In addition, EIA projected that diesel will rise to an average $3.13 next year, also a 2-cent increase.