By Frederick Kiel, Staff Reporter
This story appears in the April 30 print edition of Transport Topics. Click here to subscribe today.
The national average price of retail diesel slipped 2.6 cents to $2.851 a gallon last week, its first decline after three straight increases, the Department of Energy reported.
Also last week, the average retail price of regular gasoline dipped 0.7 cent to $2.869, ending an 11-week stretch of rising prices totaling 71.1 cents, DOE said following its April 23 survey of fueling stations.
Doug MacIntyre, an analyst with DOE’s Energy Information Administration, attributed the declines to the “two-week lag” between a recent drop in spot prices and the pass-through to retail pump prices.
Diesel, commercial trucking’s main fuel, had increased 20.1 cents over the prior three weeks in April. The price fell by 0.3 cents to 3.5 cents among DOE’s five geographical regions.
Although the national average is 2.5 cents below the price at this time last year, the current reading is 43.8 cents higher than on Jan. 29, when the average was $2.413 — the low for this year.
As a result, truckers last week paid $87.60 more on a 200-gallon purchase than at the end of January.
Similarly, gasoline is 4.5 cents below a year ago, but 70.4 cents higher than its average price at the end of January.
Trucking uses an estimated 730 million gallons of diesel and 280 million gallons of gasoline each week.
Despite the small relief at the pump last week, Don Drews, vice president of Drews Trucking Inc., told Transport Topics that recent increases have “hurt our business a lot. We tried putting in fuel surcharges again, but our customers won’t accept them.”
Drews said the company “has been in the negative every month this year because of fuel costs, but we made money when prices dropped last fall.”
To trim fuel consumption, the Abrams, Wis., carrier decreased the speed at which its 40 tractors are governed to 70 mph from 74 mph. The company also began installing auxiliary power units and routing its drivers to truck stops with the lowest prices.
“We tried various surcharges for fuel when diesel first headed up, and none of them worked until we came up with a percentage surcharge,” said Ralph Hardy, co-owner of the 60-truck company, Hardy Brothers Inc., Siloam, N.C. “We found that the percentage method is fairer to the shipper, the receiver and our company.”
The company adds a fuel surcharge of 35% of the freight bill to the total charge for each load, with a 1% change for each 5-cent movement in prices, Hardy said.
Hardy Brothers also has bought more aerodynamic trucks and installed governors capping the top speed to 72 mph.
“Both the new trucks and the governors have let us cut our fuel consumption a good deal, by 5% or so,” Hardy said.
Dana Lewis, office manager of JRP Equipment Inc., Fort Worth, Texas, told TT the heavy-hauling company is forced to guess what pump prices will be when submitting an estimate for a job.
“We don’t add a fuel surcharge, and we don’t have long-term contracts,” Lewis said. “We add in whatever extra we think diesel will cost us for a single job and send in our estimate.”
Lewis said the carrier works mostly with four or five companies and has long-standing relations with them.
Meanwhile, the price of crude oil remained above $65 a barrel on the New York Mercantile Exchange late last week, more than $2 higher than a week ago.
Analysts attributed part of the increase to DOE’s April 24 report that said gasoline supplies fell by 2.79 million barrels in the latest week, an 18-month low and 7.2% less than the five-year average.
Gasoline stockpiles have shrunk 15% in 11 straight weekly declines. DOE also said crude oil supplies rose 2.1 million barrels, while distillate stocks were flat.
MacIntyre said refinery outages and longer-than-expected downtimes for maintenance contributed to falling inventories.
