Diesel Increases 2¢ to $2.924, Pushing Price to 16-Month High
This story appears in the March 22 print edition of Transport Topics.
The U.S. retail diesel price average rose another 2 cents to a 16-month high of $2.924 a gallon last week, the fourth straight increase, the Department of Energy reported.
Diesel has increased a total of 16.8 cents over those four weeks, putting it at its highest level since Nov. 10, 2008, when the average price was $2.944 a gallon. The average is now 90.7 cents higher than it was a year ago, DOE said after its March 15 survey of fueling stations.
The department also reported that retail gasoline prices rose for the fourth straight week, with the average increasing 3.7 cents to $2.788 a gallon. Gasoline has risen 18 cents the past month and is its highest point since Oct. 20, 2008. The gas average is 87.8 cents higher than the corresponding week of 2009.
“In the case of gasoline and diesel, it’s the increasing crude oil prices that are pushing retail prices up,” Neil Gamson, an economist at DOE’s Energy Information Administration, told Transport Topics.
American Trucking Associations estimates that the U.S. trucking industry burns 752 million gallons of diesel weekly and 285 million gallons of gasoline. At those rates, truck drivers paid $682 million more for diesel last week than a year ago and $250.2 million more for gasoline.
“Financially, rising prices are going to hurt all carriers,” Steve Phillips, Werner Enterprises’ senior vice president of operations, told TT. “Things are not nearly as good as a year ago.”
“We have fuel surcharges, but they never pick up the full charge of diesel,” Phillips said. “The fuel surcharge picks up the cost of loaded miles, but you can’t make up the additional costs such as deadhead miles. There are a lot of miles that are not paid by surcharges.”
“The other factor that you have is a little bit of lag time between when fuel goes up, and when surcharges do,” Phillips added. “The best-case scenario is that they pay for last week’s increase, but sometimes it’s last month’s. That is what we’re suffering from now.”
Werner, based in Omaha, Neb., ranks No. 14 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada.
“Our game plan for dealing with fuel prices has been in place for two years, but when fuel goes up like this, it heightens our awareness of our plan,” Phillips added.
Truckers who run refrigerated trailers said they take a double hit when pump prices increase.
“These fuel increases have had a dramatic effect on our company,” Collin Stewart, president of Stewart Transport Inc., Phoenix, told TT.
“Especially since we run only reefer trailers, we buy more diesel than just for our tractors, and though we get a surcharge, it doesn’t come close to paying 100% of our fuel costs,” said Stewart, who is chairman of the Arizona Trucking Association.
Stewart said that his company runs 47 tractors and about 50 refrigerated trailers, with their “primary traffic lanes in 11 western states, mainly food distribution.”
Meanwhile, crude oil futures last week hit a two-month high on the New York Mercantile Exchange following a report showing a larger-than-expected fall in fuel inventories, news services reported.
Crude closed at $82.93 a barrel on March 17, its highest settlement since Jan. 6.
EIA data show gasoline and distillate inventories fell by 1.7 million and 1.5 million barrels, respectively. In addition, domestic oil stocks increased by 1 million barrels, well more than analysts’ estimates, Bloomberg News reported.
Also last week, the OPEC oil cartel announced it was keeping its production targets unchanged.
Saudi Arabian Oil Minister Ali al-Naimi said after the cartel’s meeting in Austria that current prices were “beautiful.”
OPEC officials said global crude oil demand is growing because of the worldwide economic recovery.
