Diesel Gains 0.8¢ to $3.438; Gasoline Dips to $3.101

This story appears in the Feb. 7 print edition of Transport Topics.

The average price of a gallon of U.S. retail diesel rose for a ninth straight week, edging up 0.8 cent to $3.438, the Department of Energy reported.

The average price for regular gasoline, however, dipped 0.9 cent to $3.101, DOE said after its Jan. 31 survey of fueling stations.

Over those nine weeks, diesel has risen 27.6 cents, leaving it at the highest level since October 2008. Diesel is now 65.7 cents a gallon more expensive than it was a year ago. Gasoline currently costs 44 cents a gallon more than it did 12 months ago.

Fleets executives said they have begun to feel the increases in their purchasing.

“In the last 11 days, we’re up about 15 cents, 16 cents since the last load I bought,” said Eugene Kieffer, facility maintenance manager for H.R. Ewell Inc., a food transporter based in East Earl, Pa.

Kieffer said that prices have been rising weekly, but there have not been as many daily fluctuations in the price, making it a little easier to manage the increases.

“I have storage for at least 36,000 gallons on-site, so I usually buy when it drops out. If it goes down 4 cents . . . I’ll buy a load,” Kieffer said. “It’s been running about an 8- to 9-day turn, where it starts dropping off, then it shoots back up again. So I’ve been lucky and outguessing it at this point.”

Kevin Lhotak, president of Reliable Transportation Specialists Inc., Chesterton, Ind., said he believed the rise was in part the result of business picking up.

“Obviously, we’re in a supply-and-demand situation, and as we see business get better, we see fuel prices slowly but surely creeping up and every once in a while taking a rapid increase,” he said.

“We run in the Midwest and Southeast,” Lhotak said of Reliable’s 350-truck fleet, “and pretty much, we’ve seen the percentage of increase is steady across the board. The trucks are out there running. They’re running a lot harder and the supply is needed, so the cost goes up.”

On Feb. 2, the Department of Energy reported that overall domestic supplies of crude oil rose 0.8% from the week before to about 343.2 million barrels.

However, at the same time, stockpiles of distillate fuels, including diesel fuel, declined 1% to just over 164 million barrels but demand, according to DOE, rose 4.9% during the week to about 3.9 million barrels.

Lhotak said recent spikes make it difficult at times. “A lot of times, we’re locked in for 30 days with a customer, and we could have a rapid increase and not be able to recoup that,” he said.

Reliable “tries to keep our customers educated, and we actually use Transport Topics quite a bit . . . to show the rapid increases and show our customers that this is not a monthly or quarterly thing that we can lock ourselves into.”

Ken Johnson, vice president of Leonard’s Express, Farmington, N.Y., said his firm has seen its fuel costs rise for both the terminal fuel that the 210-truck fleet runs and at the truck stops the company uses to fill up on the road.

“It really seems that market fluctuations and politics and world events are driving pricing,” he told Transport Topics.

Tom Kloza, chief analyst at Oil Price Information Service, Wall, N.J., said fleets can “expect nationwide prices to top $3.50 a gallon shortly, and I believe the peak may be in the $3.50- to $4-a-gallon range.”

“Crude oil and the coldest winter in the Northern Hemisphere in about 40 years have been the dual drivers,” he said, discounting some of the recent political instability in Egypt and the Middle East.

“The politics create a two- or three-day panic, where anyone who was ‘short’ on oil futures covered those positions,” he said. “Intermediate and longer term, the unrest in Northern Africa is a real long shot to impact oil futures.”

Immediately after the political upheaval in Egypt, worldwide oil prices spiked, with the price in London reaching $101.73 a barrel, its highest point since Sept. 29, 2008.

However, by press time, the price had eased considerably, closing at $90.54 a barrel on the New York Mercantile Exchange. Earlier in the week, the price closed on the NYMEX at $92.19, the highest point since October 2008.

Tom Bentz, a broker with BNP Paribas Commodity Futures in New York, said that market “rallied strongly” but was now taking a pause.

“It’s unlikely oil will hold its gains because there’s not enough happening to threaten the flow of oil,” said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Mass. “We’ve yet to see unrest spread to the countries that matter, such as Saudi Arabia and Kuwait.”

Bloomberg News contributed to this report.