Diesel Price Climbs 2¢ to $2.534; First Increase Since Memorial Day

Labor Day marked the end of the 14-week price holiday of sorts for diesel, as the U.S. average retail price rose by 2 cents a gallon to $2.534, the first increase since Memorial Day.

The Department of Energy also said that on Sept. 7, the gasoline average price dropped by 7.3 cents a gallon to $2.437, the third straight weekly decline.

A year ago, the diesel average price was higher by $1.28 a gallon, and gasoline cost more by $1.02.

The online price report from DOE’s Energy Information Administration was released Sept. 8 and was based on a Sept. 7 price survey of diesel fueling stations and gas stations.

From May 25 to Aug. 31, diesel fell by 40 cents a gallon, or 13.7%, to $2.514 — the lowest price since July 2009.

On the New York Mercantile Exchange, crude oil futures contracts drifted down less than $1 from the previous week and closed at $45.92 a barrel on Sept. 10.

Trucking executives enjoyed the decline while it lasted and noticed the increase immediately.

“We get a daily e-mail,” said Gale Libby, an owner of Wilson Lines of Newport, Minnesota, referring to price updates from the carrier’s preferred truck stop chain.

“There was a little jump, a spike, and then it went back down,” he said. Libby said his carrier is near a lot of corn farms, and harvest season usually generates competition for diesel and drives up the price.

“Our average daily price has grown by 17 cents a gallon over the last three weeks,” said Mike Eggleton, president of Raider Express in Fort Worth, Texas.

Eggleton said his drivers buy most of their fuel on the road in Indiana, Oklahoma and Texas, where prices are generally cheaper because of proximity to refineries, but the Midwest saw diesel prices rise earlier than the rest of the country. He also cited agricultural activity as a reason.

EIA’s Sept. 8 report said petroleum was most volatile in the Midwest. The gasoline average price fell by 12.3 cents a gallon there, the largest decline of any region.

The Midwest also had the country’s biggest increase in diesel, 4 cents a gallon, on average.

Raider Express does refrigerated truckload work with 200 tractors and used more than 314,600 gallons of diesel fuel during a recent 31-day period — including dyed fuel for refrigerated trailers.

The price decline was well-timed, Eggleton said, because the reefer units burn twice as much fuel in the summer as in the winter.

Irrespective of price trends, Eggleton said he outfits his trucks for maximum fuel efficiency.

“We always spec trucks for the greatest possible fuel economy, no matter the price, because you’re still saving money and it helps the environment,” Eggleton said.

As for future prices, EIA updated its Short-Term Energy Outlook on Sept. 9 and said world and U.S. markets for crude oil and refined petroleum will continue to favor buyers, and by a little more than recently expected.

The short-term outlook forecast that U.S. oil production will decline even further because global demand for oil and petroleum are growing slowly, supplies are high and, therefore, pricing is soft.

Noting the price decline for North Sea Brent crude oil in August from July, EIA said, “This third consecutive monthly decrease in prices likely reflects concerns about lower economic growth in emerging markets, expectations of higher oil exports from Iran and continuing growth in global inventories.”

EIA analyst Mason Hamilton said the report concentrates on Brent crude over Nymex because Brent is delivered to ocean tankers that can travel the globe broadly, whereas Nymex depends on West Texas Intermediate delivered in Oklahoma and it cannot travel as easily.

U.S. retail diesel is expected to average $2.54 per gallon during the last three months of this year, down from last month’s estimate of $2.56.

The first-quarter estimate for diesel is now $2.65 a gallon, down from $2.67 in the month-ago forecast.

For all of 2016, diesel should average $2.77, down from last month’s estimate of $2.81.

The U.S. gasoline predictions did not change, remaining at $2.11 for this year’s fourth quarter and $2.17 for the first quarter.

Bloomberg News reported that the nation’s refiners cut operating rates during September in nine of the past 10 years as gasoline demand slips with the end of the summer driving season on Labor Day.

“Sentiment is bearish now that refineries are entering maintenance and the driving season is over and done with,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, told the wire service. “We’re looking for weak crude demand for a couple months.”