Diesel Jumps 6.8¢ to $3.981

This story appears in the Sept. 9 print edition of Transport Topics.

The average price of U.S. retail diesel last week had its sharpest increase since February, rising 6.8 cents to a five-month high of $3.981 a gallon, the Department of Energy reported.

The third straight upturn came on the heels of modest gains totaling 1.7 cents in the previous two weeks and followed crude oil prices that reached a two-year high of over $110 a barrel late last month.

Regular gasoline climbed 5.6 cents to $3.608 a gallon, its second straight increase and the biggest gain in seven weeks, DOE said Sept. 2 following its weekly survey of filling stations.

Despite the increases, however, trucking’s main fuel is 14.6 cents below its level a year ago, and gasoline is 23.5 cents below the same week last year.

Diesel prices took an 11-week run-up late last summer into mid-September, jumping past $4 a gallon, and one fuel analyst said last week that $4 diesel pump prices are on the way back.

Tom Kloza, chief oil analyst at the Oil Price Information Service, said ongoing concern about a possible U.S. military strike on Syria could escalate, with “the threat of a spillover” potentially crimping Mideast oil output.

“We might not see $4 gasoline, but I think we’re going to see $4 diesel this month with the high price of crude oil,” Kloza said.

The diesel price was the highest since a $3.993 average April 1, and the increase was the biggest since an 8.2-cent upturn Feb. 11. The gasoline gain was the largest since a 14.7-cent spike July 15.

Crude oil fluctuated around $108 a barrel last week as the U.S.Congress debated a military strike against Syria. It closed Sept. 5 at $108.37 a barrel compared with $107.65 a week earlier.

Syria borders Iraq and is near Iran — two countries that together make up almost 20% of OPEC’s crude oil output, Bloomberg News reported.

Meanwhile, trucking fleet operating costs declined 4.3% last year despite an increase in fuel spending of 5.1 cents per mile that became the highest single operating cost for carriers, according to a report from the American Transportation Research Institute.

One trucking executive, who said he had noticed the recent spike in crude prices, said last week that his company gets bulk discount purchases from fueling stations on its major routes.

“We get cost-plus or retail-minus discounts,” said Jeff Jackson, vice president of operations for refrigerated carrier Armellini Express, which is based in Palm City, Fla.

“Those discounts give us the lowest price based on a calculation of vendor cost plus a specific amount, or the pump price minus a specific amount,” he told Transport Topics.

In Armellini’s case, its 110 trucks get the fuel discounts on their routes on Interstates 95, 75 and 10. The company runs cut flowers northbound on less-than-truckload routes and general refrigerated commodities southbound in truckload routes.

Regionally, diesel topped $4 in DOE’s West Coast area, where it rose 5.6 cents to $4.128. California, a West Coast subregion that DOE breaks out separately, posted the highest overall average, at $4.21 a gallon.

The East Coast’s $3.993 average included two subregional averages of more than $4, with New England gaining 4.3 cents to $4.087 and the Central Atlantic jumping 7.5 cents to $4.055, the week’s largest increase.

“Refiners typically will make nothing on gasoline in the last four months of the year, so they need to make their profit on diesel,” OPIS’ Kloza told TT.

“Globally, that’s the product that will carry the load for refiners,” he said, adding that the United States was exporting “a record amount of diesel” in June of about 1.2 million barrels a day, and “it looks like we might export more.”

Those factors combined could make it a “scary September” for truckers facing higher diesel prices, Kloza noted, though he said prices likely would not approach their 2008 record level.

“I think we will cross $4 — maybe between $4 and $4.25 — but unless there is global conflagration, we will not get close to 2008 numbers,” he said.

Diesel topped out at a record $4.764 per gallon in July 2008.