By Greg Johnson, Staff Reporter This story appears in the July 16 print edition of Transport Topics.
The average price of a gallon of diesel fuel in the United States rose 3.5 cents a gallon last week to $3.683, the first increase in three months, the U.S. Department of Energy reported.
Diesel had declined 50 cents a gallon since April 9 before the increase, DOE said after its July 9 survey of fueling stations.
DOE also said the average retail gasoline price jumped 5.5 cents to $3.411 a gallon, the first increase in that average in 13 weeks. Gasoline had fallen 53 cents since April 2 before the jump.
Following last week’s increases, diesel now costs 21.6 cents a gallon less than it did a year ago and gasoline is 23 cents cheaper than the corresponding week in 2011.
“Based on where the market is right now, it’s a possibility that prices have reached their bottom,” said Tancred Lidderdale, senior economist with DOE’s Energy Information Administration. “We’ve enjoyed a pretty nice drop and that’s now over, given where crude is at.”
Since crude oil closed at $106.16 a barrel on May 1 on the New York Mercantile Exchange, it steadily declined to $77.69 on June 28, the lowest level this year. However, since then, it rose as high as $87.66 on July 3 and has remained about $86 a barrel.
Trucking company executives lamented the halt of diesel’s 12-week slide, but few seemed surprised.
“I could have used another month or two, and then we would have made up what it cost us in February and March,” said Bob Holman, president of Idaho reefer hauler Holman Transportation Services Inc.
The diesel increase comes at an inopportune time because Holman Transportation’s fuel costs usually triple in the summer heat, he said.
That is because refrigerated carriers not only burn fuel to move freight, they must use diesel to run their reefer units, which use more energy in hot weather.
Greg Brown, CEO of truckload hauler BR Williams Inc., Oxford, Ala., said cheaper prices did help carriers recover some fuel costs from the earlier price hikes.
“We made most of it back, but we did not get all of it back,” Brown said.
For the past four weeks, Brown said motor carriers enjoyed a nice spread between the national fuel average and bulk prices.
That is until bulk fuel prices shot up 20 cents a gallon recently, Brown said.
“We were at $3.15-$3.18 for a month, and now it’s back up to the $3.35,” he said on July 11.
Meanwhile, in its July 10 short-term energy outlook, EIA projected that retail diesel will average $3.79 per gallon in 2012, down 11 cents from last month’s projection. EIA cited lower crude prices in May and June for the large revision. Higher prices earlier this year, peaking at $4.148 in April, inflated the average for the 12-month period.
EIA also projected stable diesel prices for the remainder of this year, ranging from $3.58 for July to $3.65 for October and November. For 2013, diesel will decline another 21 cents to an average of $3.58 per gallon, EIA said.
Similarly, gasoline will average $3.49 for 2012 and $3.28 in 2013.
