Diesel Inches Higher to $4.148, After 12th Increase in 14 Weeks

U.S. retail diesel prices rose 0.6 cent a gallon to $4.148 last week, the Department of Energy reported. Although the increase was small, it still caused fleet managers to express great concern as the national average hit the highest level since Aug. 18, 2008.

Diesel has risen 12 of the past 14 weeks, jumping 36.5 cents since the start of 2012, DOE said after its April 9 survey of fueling stations. A year ago, diesel cost an average of $4.078.

DOE also said the average price of a gallon of regular gasoline dipped 0.2 cent to $3.939, breaking a streak of 10 straight weekly increases. It was only the second decline in 16 weeks.

A year ago gasoline cost an average of $3.791.

“Our two greatest costs are payroll and fuel, and we tell this to drivers constantly. We’ve only got 65 tractors, but this has affected us tremendously,” said Craig North, safety director of Bunch Transport Inc.

“We’re preaching miles per gallon and reduced idling. We’re teaching economics to our drivers and keeping a close eye on maintenance,” said North, whose company offers truckload and intermodal drayage service out of North Charleston, S.C.

“We have a fuel surcharge, but that doesn’t cover the entire increase in prices, so the rest comes off the bottom line,” said Michael Beckwith, president of Apollo Motor Express, a Shrewsbury, Mass., less-than-truckload carrier.

“We coordinate shipments to customers and consolidate deliveries for customers, if possible, but that can conflict with the basic principle of transportation to ‘get it here before yesterday,’ ” said Beckwith, whose family business runs 20 power units out of one terminal.

U.S. stocks of crude oil and refined products are ample and usage rates are not particularly high, said Bruce Gress, director of petroleum risk management for Pilot/Flying J Travel Centers. However, worries about international politics and finances are currently far more influential than supply and demand.

Concerns about a possible war involving Iran started driving crude oil prices higher in December, and speculation by investors in oil futures exacerbated the increases, Gress said.

“Personally, I’m bearish on fuel. Demand is not very good; the recent jobs report was not very good . . . and the Federal Reserve said there would not be another round of quantitative easing on money, so there are more things on the bearish side,” Gress said.

Recent prices for crude oil futures on the New York Mercantile Exchange remained below the peak for this year, dipping to about $101 a barrel on April 10, before closing at $103.64 on April 12.

The peak closing price so far this year was on Feb. 24 at nearly $110 a barrel, up from about $76 in early October.

DOE’s Energy Information Administration also released its Short-Term Outlook on April 10, estimating that diesel will average $4.21 a gallon this summer.

The forecast expects a retail average of $4.25 in August, before receding gradually to $4.18 in December. Trucking’s main fuel will average $4.11 a gallon next year, DOE said.

Gasoline will average $3.95 during the April-September summer driving season this year and $3.81 for the full year, before slipping to an average $3.73 in 2013, EIA projected.

Gasoline analyst Trilby Lundberg said the average price for regular gasoline at U.S. filling stations may have peaked, Bloomberg News reported April 9.

“Price hikes at the pump have been losing steam for weeks,” Lundberg said.

“Crude oil prices have slipped, and if they don’t rebound in the very near future, gasoline prices will peak very soon, if they haven’t already,” she told Bloomberg.

While Apollo’s trucks use diesel, Beckwith said, he also follows gas prices because of their effect on consumer buying power.

“As gasoline prices continue to climb along with diesel, the general population recedes in its shopping habits,” Beckwith said, adding that some of his shipper customers have complained of a decline in orders. Beckwith described the shippers as New England-based manufacturers of consumer goods.