Diesel Drops 5.2¢ to $3.729 After 10th Consecutive Decline

U.S. diesel prices continued their longest slide in 3½ years, as the national average declined 5.2 cents to $3.729 a gallon last week, the Department of Energy reported.

The average price for commercial trucking’s main fuel now has dropped a total of 41.9 cents over the past 10 weeks and is 22.1 cents cheaper than a year ago, DOE said after its June 18 survey of fueling stations.

The previous time diesel fell for more than 10 weeks was a 14-week stretch that ended in January 2009. Over that time, the average plummeted to $2.291 from $3.959.

DOE also said the retail gasoline average declined for the 11th straight week, slipping 3.9 cents a gallon to $3.533. Gasoline has now fallen 40.8 cents since April 2 and is 11.9 cents cheaper than it was a year earlier.

Crude oil closed June 21 at $78.20 a barrel on the New York Mercantile Exchange, the first time in nine months it had been this low. The last time crude closed below $80 was $79.68 on Oct. 5, 2011.

Kyle Cooper, managing partner in oil industry consultancy IAF Advisors, Houston, said oil and fuel prices are falling because of weak economic data.

“Things just don’t look to be improving that quickly,” he said, citing recent reports on manufacturing, the job market and the housing sector.

As a result, “prices could come off another nickel or a dime,” he predicted.

However, Tom Kloza, chief oil analyst with the Oil Price Information Service, Wall, N.J., warned that pump prices could rebound soon, in part because of lost output at a Texas refinery.

On June 11, Motiva Enterprises LLC, Houston, said a 325,000-barrel-a-day crude distillation unit at its Port Arthur, Texas, refinery will be shut for several months to repair damage.

The result will be lower domestic diesel production, Kloza said.

In the meantime, Miller Truck Lines LLC, Stroud, Okla., is capitalizing on lower diesel prices by “stocking up on fuel,” said fuel manager Monica Neeley.

Miller has a 36,000-gallon aboveground fuel tank at its Tulsa, Okla., terminal, as well as three 9,000-gallon tanker trucks.

“That gives us another 27,000 gallons of fuel capacity,” she said. Miller also has a 24,000-gallon fuel tank at its Stroud, terminal, Neeley said.

“We have 87,000 gallons of capacity, but we will go through that in 10 days,” she said.

She estimated saving $3,500 on the low end every 10 days, depending on spot prices.

“I look at several different suppliers every day, and I watch the market every day,” she said.

Because Miller Truck Lines operates dry vans, reefers, flatbed and tank trucks, it can haul its own fuel, Neeley said.

“This is one of the ways we’re saving money, being in control of our own fuel.”

DOE figures showed that in California, diesel last week dropped below $4 a gallon for the first time since Feb. 28, 2011. That decline has allowed at least one California hauler to lower its fuel surcharge for the first time in many months.

“It’s nice, because we’ve been at 32% all year,” said Chris Quezada, director of operations at Rapid Transfer Xpress in San Diego. Quezada was referring to the percentage of base rates his company imposed when diesel prices skyrocketed earlier this year.  “We’ve dropped 5%, and we’re now at 27%,” he said, “but all we do is pass the reduction on to our customers.”

Meanwhile, DOE’s Energy Information Administration said weekly domestic distillate fuel demand dropped to 3.5 million on June 15 from 4.01 million barrels a day on April 13.