Diesel Extends Decline 0.6¢ to $3.845; Midwest Bucks Trend With 2.9¢ Rise

This story appears in the May 13 print edition of Transport Topics.

The U.S. retail diesel average price declined for the 10th straight week, dropping 0.6 cent a gallon to $3.845, the Department of Energy reported.

Diesel has fallen 31.4 cents a gallon since Feb. 25 and was selling for 21.2 cents below its price of $4.057 a gallon a year ago, DOE said after its May 6 survey of filling stations.

The 10 consecutive declines mark the longest period since 12 straight drops last year from mid-April through early July.

Last week’s drop in the national average price might have been larger, had there not been a 2.9-cent increase in the Midwest to $3.868, according to DOE figures.

That was the first increase anywhere in the country in a month and the only region to experience any weekly increase other than the West Coast over the past 10 weeks.

“The agricultural planting season, which by all accounts is supposed to be a pretty big one this year to kind of make up for the drought last year, is starting to get under way, and it’s driving diesel demand in the Midwest,” said Sean Hill, an analyst at the DOE’s Energy Information Administration.

Even as the U.S. diesel average price dropped, gasoline rose 1.8 cents to $3.538 a gallon, the first increase in 10 weeks. It had fallen 26.4 cents since late February and is currently 25.2 cents below a year ago.

The bump in gasoline is seasonal, as the public begins spring and summer travel, Hill said.

“We usually see an uptick in demand at this time of year, and gasoline [inventories] were down. So demand is up a little on a national level, just like we saw diesel in the Midwest.”

John Powell, another petroleum analyst with the EIA, said the drop in diesel continues to be “crude related.”

“The lag tends to be very short when prices go up and a little bit longer when prices go down,” he said.

Crude oil futures prices on the New York Mercantile Exchange remained relatively stable last week, reaching $96.62 a barrel on May 8, the highest closing since April 2, before settling at $96.39 on May 9.

Crude dipped to a 10-week low of $86.68 on April 17 but has since slowly edged up.

Powell said diesel will probably remain flat over the coming months. The fuel is forecast to average $3.88 in June, $3.87 in July, and $3.87 in August, he said. Even extending into 2014, DOE said diesel will average $3.79.

The agency also said gasoline will average $3.50 a gallon this year, down from its previous forecast of $3.56. Prices will average $3.39 in 2014, DOE estimated.

In an effort to save on fuel while on the highway, Cory Adams, driver manager for Nussbaum Transportation in Normal, Ill., said his company uses an optimizer that identifies the cheapest prices on a given route.

The company experiments with a variety of fuel-saving technologies, distances between fairings and trailers, engine specifications, transmissions and rear-end ratios, Adams said.

Nussbaum also uses an on-road monitoring system to track fuel trends.

“We can search things in all sorts of ways in a few seconds or a minute,” Adams said. “We can pick a day, week, month, segments of tractors, or drivers.”

Jesse Gosman, marketing director for Louisville, Ky.-based Usher Transport Inc., said his company buys about 7,500 gallons of diesel a week in bulk to save on retail prices.

Usher also uses super-single tires and keeps a close eye on spec’ing equipment to minimize weight.

“Equipment specifications are critical to your fuel savings,” Gosman said.

Staff Reporter Michele Fuetsch contributed to this story.