Diesel Fuel Price Declines 4.3¢ to $4.061

The average cost of a gallon of U.S. retail diesel declined 4.3 cents to $4.061 a gallon last week, the biggest drop in nearly a year, according to the Department of Energy.

While diesel has now declined for two consecutive weeks by a total of 6.3 cents, the average price is still 96.7 cents higher than it was a year ago, DOE said after its May 16 survey of fueling stations.

It was the largest drop since May 24, 2010.

The department also said the average price of a gallon of retail regular gasoline dipped modestly last week, 0.4 cent, to $4.014 a gallon.

Gasoline, which has been essentially flat recently, is still $1.096 a gallon higher than its year-ago level.

One analyst said pump prices pulled back last week because formerly bullish petroleum investors have become more cautious due to recent economic reports and statistics showing falling fuel demand.

“We just ran out of buyers, and they couldn’t keep the pressure up,” said Bruce Gress, director of petroleum risk management for Pilot Flying J.

The price of crude oil hit a three-month low of $96.91 a barrel on the New York Mercantile Exchange on May 17, Bloomberg News reported.

DOE’s latest report on consumption shows that distillate demand has now fallen for three consecutive weeks. In the week ended May 13, distillate demand dropped to 3.6 million barrels a day from 3.8 million barrels a day the previous week.

Although the spike in diesel prices seen throughout most of the year has apparently eased, trucking companies are still carefully monitoring fuel expenses.

Greg Brown, CEO of BR Williams, an Oxford, Ala., truckload carrier, said his company is able to buy bulk diesel for between 18 cents and 28 cents a gallon below the retail average.

The carrier also outfits its trucks with larger fuel tanks so drivers can fit more fuel in their rigs, which reduces the number of fill-ups made at retail stations.

“We run 150 gallons on each side” of the truck, Brown said. That allows a truck to carry 300 gallons of fuel with it, compared with a typical payload of about 200 gallons.

Brown said his company is also considering auxiliary power units. However, the devices, which power driver amenities such as climate control and appliances, are uneconomical unless diesel remains around $4 a gallon, he estimated.

The maintenance chief at another carrier said his company is controlling fuel expenses through a combination of optimization software and discounts with truck-stop operators.

“We rely a lot on our relationships with our vendors,” said Tom Wildish, director of maintenance for truckload hauler Miller Truck Lines, Tulsa, Okla.

Miller negotiates discounts with truck-stop vendors through its fuel-card provider. It then programs the location of discounted fuel stops into its dispatch software. When a load is dispatched, the software will produce a list of truck stops along that way where Miller has secured a discount.

“It saves a pretty good chunk of change for us,” Wildish said.

Wildish also reported positively on several 2011 model-year trucks with selective catalytic reduction emission-control technology.

Miller Truck Lines hasn’t run the new rigs for very long, but Wildish said initial measurements show that mileage on the 2011 models is “an improvement over the 2007 versions” of the same truck.

Wildish said the 2011 trucks appear to be about half a gallon per mile more efficient that the 2007 trucks.