Diesel Price Keeps Falling, Lowest Since July 2012

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

Diesel fuel’s national average retail price fell 2.2 cents to $3.733 a gallon, the 14th straight week without an increase and 25th drop in the past 30 weeks, the Department of Energy reported.

The downturn left trucking’s main fuel 28.8 cents below its 2014 high of $4.021 in mid-March and 16.4 cents below the comparable week last year, DOE said Oct. 6, after its weekly survey of filling stations.

Gasoline, meanwhile, fell 5.5 cents to $3.299, the 12th downturn in 14 weeks and lowest pump price since February.

The gasoline drop matched that of two weeks earlier, with the two downturns marking the biggest single-week declines since November.

The motor fuel, 6.8 cents below a year ago, has fallen 16 cents in the past month and plunged more than 40 cents since June.

The diesel decline left it at its lowest level since posting a $3.695 average July 16, 2012.

One trucking executive said last week that even with prices falling, his fleet undertakes a variety of means and methods to keep its fuel costs in check.

“It’s nice to have prices coming down, that’s for sure,” said Ronald Niemoth, chief financial officer for Seward Motor Freight in Seward, Nebraska. “A lot of us are in the same boat, trying to improve the miles per gallon in our trucks.”

Seward, which participates in the U.S. Environmental Protection Agency’s SmartWay program, has done everything from adding auxiliary power units and trailer skirts to its new trucks and trailers, Niemoth told Transport Topics.

“We’ve put them on all our new trucks in the last four years or so,” he said, adding that the carrier uses a tire inflation system to keep its trailer tires properly inflated, “which improves miles and tire wear.”

Seward has added new tractors with automated manual transmissions and does some on-site fueling at its home terminal, although that is minimal in its overall operations, because its trucks run in 48 states.

It also uses optimizers to let drivers know where to buy on-road fuel at the lowest price. “When we dispatch a load, it tells them where to buy fuel, because it varies in different regions,” he said.

Meanwhile, DOE’s Energy Information Administration said last week that diesel prices will continue to decline this year and will average $3.68 in the fourth quarter — down 6 cents from a previous forecast.

Diesel, which averaged $3.92 a gallon in 2013, will average $3.85 this year, EIA said in its monthly short-term energy outlook released Oct. 7. With prices higher earlier this year, it averaged $3.96 in the first quarter.

It will average $3.80 next year, a decline of 2 cents from last month’s outlook, rising gradually from the start of the year, the report said.

The lower projections are largely due to falling oil prices, said Tancred Lidderdale, an EIA analyst.

“As a general rule of thumb, each $1 per barrel change in the oil price changes the price of [retail fuel] products by 2.4 cents per gallon,” he said.

The declines followed low oil prices, which have plunged about $15 since mid-July.

Crude futures fell to the lowest level in almost two years Oct. 9, closing at $85.77 a barrel on the New York Mercantile Exchange. That was the lowest Nymex closing price since Dec. 10, 2012.

Futures fell below $88 in midday Nymex trading Oct. 8 after a separate EIA report that showed weekly inventories of crude, diesel and gasoline rose for the week ended Oct. 3.

Distillate inventories, which include diesel and heating oil, rose 450,000 barrels, in contrast to analysts’ forecasts of a 1.3 million-barrel decline.

Crude supplies jumped 5 million barrels, well above the 2 million-barrel gain that was forecast, and gasoline stockpiles rose 1.2 million barrels, in contrast to a predicted half-million barrel draw.

Refineries operated at 89.3% of capacity, down half a percentage point from the previous week. U.S. refiners schedule maintenance for September and October as they transition to winter from summer fuels.

EIA also said last week that U.S. households will see their heating-oil costs drop 15% on average this winter as milder weather reduces demand. Diesel prices often rise in the winter months as the fuel competes with heating oil for distillate stocks.

EIA’s projections were based on a record rebound in natural-gas stockpiles, lower crude oil prices and a National Oceanic and Atmospheric Administration forecast that much of the country will be warmer than last winter’s extreme cold.

Bloomberg News contributed to this story.