Diesel Price Dips 0.7¢ to $2.931

This story appears in the Sept. 13 print edition of Transport Topics.

Diesel prices dipped for the fourth consecutive week, as the U.S. retail price average slipped 0.7 cent a gallon to $2.931 from the week before, the Department of Energy reported.

The most recent peak in price for diesel was $2.991 a gallon on Aug. 9.

Gasoline prices were unchanged, with the average gallon selling for $2.682, DOE reported last week after its weekly survey of fueling stations.

High petroleum inventories and lukewarm demand, coupled with a less-than-robust economic recovery, have held down both retail fuel and crude oil prices, market analysts said. Those factors were expected to keep fuel prices steady in the near future.

“The expectation is that crude oil prices . . . aren’t going to move much over the rest of this year and it’s unlikely diesel fuel prices will either,” said Tancred Lidderdale, senior economist with the DOE’s Energy Information Administration.

“I think we’re going to see in the short term stable prices,” said Andrew Reed, an oil analyst at Energy Security Analysis Inc.

That was welcome news to carriers.

“Stable’s a good thing,” said Don Piontek, manager of fuel and the license department at Trans-System Inc., a Spokane, Wash., firm that owns three carriers. “It’s when it moves around rapidly, that’s when it’s not fun.”

Trans-System, which runs a total of 900 tractors and about 2,000 trailers, depends largely on its fuel surcharges to manage fuel costs, Piontek said.

“Anymore, you’ve got to,” he said. “There’s no such thing as just hauling for what the market will bear these days.”

Like other trucking firm executives, Pauline Jaske, who is president of and co-owner with her husband, Bud, of Fairway Transit in Pewaukee, Wis., said she is scrupulous about using fuel surcharges to control diesel costs.

“If they don’t pay a fuel charge, we don’t work for them because there’s no way you’re going to survive without it,” said Jaske, who is chairwoman of the Wisconsin Motor Carriers Association.

Fairway, which Jaske and her husband founded in 1967 with one truck, also has put auxiliary power units on 18 of its 39 trucks, concentrating on the trucks that run overnight.

Jaske said she purchased the first APU more than two years ago with the help of grant money from Wisconsin’s anti-idling program.

“My one driver saved me $7,000 in fuel that year using that APU,” she said.

To further hold down fuel costs, Jaske has bulk tanks at Fairway Transit’s terminal and monitors the engines on her mostly dump truck fleet, which hauls stone, gravel and sand.

If the engine readings show a driver is idling excessively or engaging in too much brake action, he or she is counseled on driving habits, she said.

At C&C Trucking, a dry van carrier in Duncan, S.C., president Greg Grubbs said his firm is doing what most other carriers do to hold down fuel costs.

“We have APUs . . . on our fleet, and we have the super single tires to try to economize, as well,” Grubbs said.

The APUs were added to about 100 of the carrier’s 150 trucks when the vehicles were purchased in late 2005 and 2006, Grubbs said.

C&C, a subsidiary of U.S. Xpress Enterprises in Chattanooga, Tenn., also monitors its engines, Grubbs said, and counsels drivers if their driving habits drive up fuel use. Drivers also are given a list of where the least-costly fuel can be purchased on their routes, Grubbs said.

Meanwhile, Reed of ESAI said the recent retreat in crude oil prices means that any change in diesel prices for the remainder of 2010 is more likely to be downward than upward. Last week, crude was as much as $9 a barrel lower than early August when it was more than $82 a barrel.

Both Reed and Lidderdale said lower prices for crude and diesel were the result of tepid economic growth and growing stocks of distillate fuels.

Inventories of distillate, the base product for both diesel and heating oil, are the highest for this time of year since December 1981, the government reported last week.