By Michele Fuetsch, Staff Reporter This story appears in the Sept. 27 print edition of Transport Topics.
The U.S. diesel average price rose 1.7 cents to $2.96 a gallon last week, the second straight week it has inched upward, the Department of Energy reported.
The gasoline average also ticked up slightly, gaining 0.2 cent to $2.723, DOE reported after its Sept. 20 survey of fueling stations.
Diesel was well above the average of $2.622 a gallon it sold for at this time last year, but less than it cost a month ago — $2.957. Gasoline was $2.552 a year ago and $2.704 a month ago, according to DOE data.
Diesel and gasoline prices have been relatively calm in recent months because the price of crude oil has been stable, said Chris Barber, an oil analyst with Energy Security Analysis Inc.
“Diesel and gasoline prices aren’t going to get too far away from oil prices unless there’s some sort of bullish or bearish driver in the market,” Barber said.
Higher fuel prices are not unusual this time of year because refineries begin producing heating oil, which explains why diesel and gasoline prices went up last week, said another ESA analyst, Andrew Reed.
Fuel surcharges help carriers ride out weekly price fluctuations but, increasingly, fleets plot long range strategies to control fuel costs, said Micheal Jimenez, founder and president of intermodal J&L Transportation, Phoenix.
“I would say, back 15 years ago, it wasn’t even a thought process,” Jimenez said of fuel strategies.
Over the past decade, though, he has taken steps to monitor fuel use that have improved his average miles per gallon to 5.8 from 5, he said.
“We do everything with a card lock system, so I can monitor my fuel cost based on individual usage of a truck,” said Jimenez.
He gives drivers a card, and “each time my units fuel, we log certain aspects . . . the driver, the mileage of the truck, when it was fueled, where it was fueled . . . and that keeps a running record of what the trucks are doing.” That allows Jimenez to read data generated by each truck engine to determine if the driver needs training or if the truck is in need of repair, he said.
He also said the company is spec’ing trucks with the proper engines and transmissions to maximize fuel economy.
Although diesel and gasoline prices rose last week, the increases were small for the time of year because diesel demand in the United States is weak and distillate inventories are so high, Reed said.
Distillates “hit a record high last year and this year, they’ve managed to set new records,” he said.
In early August, U.S. distillate inventories topped 173 million barrels and have stayed over that for seven consecutive weeks, according to the Sept. 17 inventory report from the DOE’s Energy Information Administration.
Distillate inventories have not been that high for that long since the winter of 1982-83, EIA said.
For the remainder of 2010, truckers can expect to see stable diesel prices, said ESA’s Reed. Because inventories of distillate are so high, he said, heating oil is unlikely to be competing with diesel in the distillate market.
A big swing in world crude oil prices could change predictions for stable diesel and heating oil prices, but crude is trading in a narrow range, the analysts said.
Crude oil prices on the New York Mercantile Exchange closed Sept. 23 at $75.18. A week earlier, the prices closed at $74.54 a barrel.
