Diesel Price Finds 8-Week Low

The pump price of diesel slid to an eight-week low last week, with a national average of $1.066 a gallon, just before the summer travel season began.

Memorial Day generally marks the time for motorists to get in their cars for destinations such as the beach or vacation homes. It is also when oil companies increase the production of gasoline to meet the spike in demand. One of the side benefits is refineries make and have more diesel in stock.

According to the Department of Energy, the national average price for diesel dropped 0.9 cent May 24 from $1.075 the previous week. It was the first time the cost dipped under $1.07 since March 29, when the average was $1.046.

So far in 1999, the average has swung from a low of 95.3 cents a gallon on Feb. 22 to a high of $1.084 a gallon on April 12.

At $1.066, the price remains above the “trigger point” for surcharges in many truckload contracts. However, most carriers have declined to implement the surcharges.

Randall Nottingham, a senior economist with Standard & Poor’s DRI energy forecasting and consulting unit, said the run-up in crude oil prices, which affected diesel costs, reflected speculation that members of the Organization of Petroleum Exporting Countries would uphold their agreement to limit output.

“The market went up rapidly when OPEC announced the agreement, and sort of overshot the mark,” he said.

Nottingham called the current series of reductions in diesel price a correction.

For the full story, see the May 31 print edition of Transport Topics. Subscribe today.