By Frederick Kiel, Staff Reporter This story appears in the June 6 print edition of Transport Topics.
The average price of a gallon of retail diesel fuel in the United States declined 4.9 cents to $3.948, the fourth consecutive weekly drop, the Department of Energy reported.
Despite the 17.6-cent dip over the past month — which left commercial trucking’s main fuel at its lowest average price since March 28 — diesel is still 96.8 cents per gallon more expensive than it was a year ago, DOE said after its May 30 survey of fueling stations.
The Energy Department also said the retail gasoline average price declined by 5.5 cents to $3.794 per gallon. Gasoline has dropped 17.1 cents over three weeks, but the average price is still $1.066 higher than the corresponding week of 2010.
“We had several things that affected retail prices this week, some of it resulting from the lag in the decline of crude oil from its high point in April,” Neil Gamson, economist at DOE’s Energy Information Administration, told Transport Topics.
Truckers acknowledged that the recent price decline at the pump has helped their bottom lines.
“The decrease did allow us to make some modest recovery in what we lost in fuel surcharges when prices were rising,” Brian Kinsey, CEO of James Brown Contracting Inc., Lithonia, Ga., told TT.
He said that Brown Contracting operates 835 tractors over mostly shorthaul routes and gets “reimbursed in surcharges for about 80% of the miles we run.”
“The truth is, however, that we lose more money on surcharges when prices go up than we get back when the process goes down,” Kinsey said. “The amount of fuel costs that we recovered in fuel surcharges improved by about 10% [since diesel fell] but is still below the percentage we lost in the run-up.”
Jim Burg, president of James Burg Trucking Co., Warren, Mich., also said the company has benefited from falling prices the past month.
“Even though we try to negotiate fuel surcharges that are flexible to the rise and fall of diesel prices, there are other essential traveling costs where they don’t apply, especially for position moves,” he said.
Burg explained that a “position move” is when the company “had a contract to take freight from point A to point B, but we might have to send a tractor 50 miles to get to the pickup point. We have to pay for that.”
Burg said that company began to buy more fuel-efficient tractors in 2008 and was now considering new technological improvements.
“Initially, all we can do is to retrain drivers,” Burg said. “They all like to go to a special place for a cheeseburger, so that we’re going to stress they have to stay close to their routes and buy at truck stops where we have discounts.”
Burg said the company was testing some “prototype trailers . . . with advanced aerodynamics” to decide whether to buy them.
The company will continue to replace its “aging fleet” only with trucks certified by the Environmental Protection Agency’s SmartWay program because those vehicles reduce fuel use and emissions, Burg added.
Meanwhile, crude oil on June 1 remained near $100 a barrel on the New York Mercantile Exchange, well below its recent high of $113.93 set on April 29, Bloomberg News reported.
It has been in a tight trading range for nearly a month, but DOE’s Gamson warned the price of crude remains “volatile.”
He also noted that diesel could rise in the United States because of continued strong demand in many parts of the world. At the same time, gasoline could see additional cost pressures during the peak summer driving season in the United States.
