Diesel Inches Ahead 0.4¢ to $3.975 Rising for Second Straight Week

This story appears in the May 5 print edition of Transport Topics.

The price of U.S. retail diesel rose by 0.4 cent to $3.975 a gallon, the second consecutive weekly increase after a five-week decline, the Department of Energy reported.

Diesel sold 12.4 cents higher than the same week last year, when trucking’s main fuel was $3.851 a gallon, according to DOE records.

Gasoline gained 3 cents to $3.713 a gallon, jumping 42 cents over the past 12 consecutive weeks and selling for 19.3 cents a gallon more than it did a year ago, DOE said after its April 28 survey of 400 diesel and 800 gasoline filling stations.

Diesel sold for $4.021 on March 10, its highest pump price in almost a year. Diesel’s record high was $4.764 in July 2008.

In the survey last week, diesel sold for $4.208 in New England, the U.S. region with the highest average price and higher than $4.185 in the Central Atlantic region and $4.140 in California.

“We did see over the last few weeks crude prices move up a little bit,” said Timothy Hess, a DOE petroleum market analyst, “but prices have been fairly stable on the diesel side.”

Crude on the New York Mercantile Exchange has sold for more than $100 a barrel since April 3. On May 1, however, it closed at $99.42.

Hess attributes the recent increase in crude to a combination of factors, including some refiners’ performing maintenance on their facilities, disruptions in supply in Libya and the largest British North Sea oil field and unrest in Ukraine.

“The crisis in Ukraine continues to pose a major risk,” Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S, Bloomberg News reported last week. “It has not led to any interruption in oil supplies yet, and this leaves the market exposed to downside risk.”

Although distillate stocks are a little lower than average, Hess said there have been some small builds over the past few weeks.

The increase in gas prices during the past 12 consecutive weeks has not been a surprise, Hess said.

“You get a little more price action on gas in the spring than you do with diesel,” he said. “As stations shift to summer-blend gasoline, that can cost, on average, maybe 10 cents a gallon more to produce.”

Moreover, when refineries are down in the spring, the results tend to affect gasoline prices more than diesel because it’s the time of year when gasoline demand is ramping up, heading into the summer driving season, Hess said.

But with some refineries coming back on line with maintenance season nearly over, the price of diesel at the pump could dip to $3.90 by June and $3.75 by the fourth quarter, Hess said.

That would be good news for motor carriers attempting to squeeze the best efficiency from every gallon of diesel.

“Reducing one-tenth of a mile per gallon is worth millions to us,” Elizabeth Fretheim, a transportation director for Wal-Mart Stores Inc., said at a National Research Council committee session on fuel-saving technologies April 28-29 in Washington.

Fretheim told the committee that the retailer has worked on routing optimization, more efficient trailer loading and coaxing more mileage out of its private fleet of 6,100 tractors.

Another tactic for saving mileage is inflating truck tires with pure nitrogen rather than air, which is mostly nitrogen. Fretheim said Wal-Mart also soon will begin testing waste-heat recovery, an engine design where heat is captured and converted into horsepower.

Wal-Mart, with headquarters in Bentonville, Ark., ranks No. 4 on the Transport Topics Top 100 list of the largest private carriers in the United States, Canada and Mexico.

Randal Mullett, a Con-way Inc. vice president, explained to the researchers that his company has taken an “all-of-the-above” approach to attacking fuel spending.

Governing engine speed “is the biggest single thing we’ve ever done,” Mullett said. Speed maximums were cut to 65 miles per hour from 70 at the truckload division and to 62 mph from 65 at the less-than-truckload unit.

That saved 6 million gallons a year, he said.

Managers at Con-way — No. 3 on the TT100 list of for-hire carriers in the United States and Canada — are trying to cut vehicle idling in general but especially when temperatures are moderate.

Mullett said the trucks have thermometers, and when the outside temperature is between 30 degrees and 70 degrees, the trucks have an even narrower window for idling than usual.

Associate News Editor Jonathan S. Reiskin contributed to this report.