Diesel Gains 3.6¢ to $2.936

This story appears in the March 9 print edition of Transport Topics.

Continued cold weather throughout parts of the United States pushed the diesel average price 3.6 cents higher to $2.936 a gallon, the Department of Energy reported.

It was the fourth straight increase for commercial trucking’s main fuel, lifting diesel to the highest level since Jan. 12, when it last topped $3.

The average price has risen more than a dime over the past month but is $1.08 lower than a year earlier.

DOE also reported after its March 2 survey of fueling stations that the retail gasoline average price jumped 14.1 cents to $2.473 — the highest level since mid-December. It was the largest increase in a year and a half, leaving it $1 lower than the same week in 2014.

The diesel price hike was led by double-digit increases in the Northeast region, where cold weather boosted demand for heating oil, kicking prices higher, an analyst said.

“As the March [ultra-low-sulfur diesel] contract expired, some Northeastern refineries were operating at limited capacity levels, and that’s why the diesel price jumped up,” said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.

The price rose in DOE’s New England and Central Atlantic areas by 11.8 cents and 13.3 cents to $3.291 and $3.293 a gallon, respectively. The two are part of DOE’s East Coast region, which rose 7.8 cents to $3.083.

ULSD futures closed at nearly $2.30 a gallon on the New York Mercantile Exchange on Feb. 27 — the highest level since Thanksgiving — but receded to around $1.90 last week as the March contract expired and April trading began.

Last week’s overall gas increase was the biggest since it rose 14.7 cents on July 15, 2013. It has jumped 43 cents over five weeks, pushing the average price to its highest level since mid-December.

The increase was fueled by a record 37.2-cent jump in DOE’s West Coast region, which included a 45.9-cent spike in California. The West Coast average was $3.13 per gallon, and California’s price $3.418 — the only areas where gasoline topped $3 a gallon.

McGillian attributed the jump to the aftereffects of a Feb. 18 explosion at an Exxon Mobil refinery in Torrance, California, that crippled regional production.

The previous West Coast record was a 32.8-cent jump in October 2012, according to DOE’s Energy Information Administration.

McGillian also said high oil supplies could help lower pump prices, but he noted that refineries’ upcoming spring maintenance potentially could offset those declines.

A study released by truck leasing firm Fleet Advantage outlined the benefits for fleets that use newer trucks. The company said 70% of fleets reported “a consistent increase in fuel economy for truck model years 2011-2015.”

Fleet Advantage’s Mike Spence said fleets moving to newer vehicles could save $300 or $400 a month in fuel expenses, in addition to lower maintenance costs.

“You do not want to get locked into a vehicle you’re going to have to operate until it’s functionally obsolete, because you’ll spend a lot more than if you moved into a new vehicle,” said Spence, the company’s senior vice president of fleet services.

“Part of good fuel economy is having a truck that’s spec’d properly,” he told Transport Topics.

If a truck is set up in conjunction with its maximum cruise speed “at or near peak torque setting of around 1,000 to 1,200 rpm in most cases, then that truck will generate maximum fuel economy,” he said.

He also said correctly spec’ing engine control modules and limiting speed can boost fuel economy.

“So you no longer have drivers running down the road at 75 or 76 mph and burning up an extra two or three gallons of fuel every 10 miles,” he said.

Oil prices, meanwhile, hovered around $50 a barrel last week as EIA reported that domestic stocks jumped more than 10 million barrels. That was almost three times analysts’ estimates, Bloomberg News reported.

Distillate inventories declined less than forecast, and gasoline supplies rose slightly.