Diesel Price Rises 4.7¢ to $3.951; Cold Creates Spikes in Northeast

This story appears in the Feb. 10 print edition of Transport Topics.

The continued cold weather throughout much of the United States pushed the diesel average up 4.7 cents to $3.951 a gallon last week, the highest price since September, the Department of Energy reported.

The increase followed a 3.1-cent gain the previous week and was led by spikes in DOE’s New England and Central Atlantic subregions, where diesel soared by more than 13 cents to $4.305 and $4.281 per gallon, respectively.

The gain in the national average was the most since a 6.8-cent gain on Labor Day, leaving the price at the highest level since $3.974 on Sept. 16.

While California’s diesel price is historically the highest in the country — it has generally held above $4 a gallon the past three years — New England’s has become the most expensive during the past month, topping California by 23 cents last week.

One analyst said the Northeastern price spikes were largely due to this winter’s cold weather and diversion of distillate stocks — which include diesel and home heating oil — to nontransportation uses.

“A lot of diesel has been burned to generate heat and electricity, rather than to facilitate transportation,” said Tom Kloza, chief analyst at the Oil Price Information Service.

Looking ahead, Kloza told Transport Topics, “We could see some of the highest retail diesel prices since last spring. The culprit isn’t necessarily strong domestic demand, nor high crude prices. This time, you can blame Mother Nature and curtailments of natural gas” supplies.

Last February, diesel peaked at $4.159 a gallon, the highest price in more than four years and the highest price ever for the month of February.

The U.S. retail gasoline average, meanwhile, dipped 0.3 cent to $3.292 per gallon, its fourth straight decline and second slide of less than a penny.

Last week, diesel was 7.1 cents below its level a year ago, and gasoline was 24.6 cents less than the corresponding week last year, DOE said after its Feb. 3 survey of fueling stations.

One New England-based trucking executive said diesel prices had kicked noticeably higher recently.

“Prices have definitely spiked in the past few weeks,” said Kashef Abbasi, director of operations for truckload carrier ICC Trucking in Farmington, Conn. “It’s like a stickup in Connecticut and Massachusetts, with prices as high as $4.30 or $4.40 a gallon.”

The carrier asks its drivers not to idle, “But, obviously, in extremely cold weather they have to idle to keep warm,” Abbasi said.

ICC tries to buy as much diesel as it can in New Jersey, he said, where diesel and gasoline are generally cheaper, in part because of lower fuel taxes.

One New Jersey-based drayage carrier said the combination of high prices and bad weather was doing a double-whammy to its bottom line.

“We’ve had tremendous delays at the port this year,” said Tom Heimgartner, president of Newark-based Best Transportation, which operates primarily at the Port of New York and New Jersey.

This year’s ongoing slew of winter storms caused the port to delay its opening on Feb. 5, he said.

“The price has gone up precipitously in the past few weeks [and] . . . we’re burning a ton of fuel moving up in line every few minutes,” Heimgartner told TT.

Best Transportation also has had trouble recouping its full fuel costs from steamship lines, which have varying fuel surcharge calculations that can cost it 10-15% of its surcharge recoupment, he said.

The carrier, which has a 100-truck fleet, buys much of its fuel in bulk but also has seen shortages lately at fuel depots to load its in-house tankers, Heimgartner told TT.

“Sometimes they don’t have any fuel available, which happens in the winter because they make more home heating oil,” he said. “We’re trying to keep a couple of days of fuel on hand to keep our fleet rolling.”

This winter’s effect on declining distillate supplies was evident with a draw of 2.4 million barrels for the week ended Jan. 31, mirroring recent weeks, DOE said.

Crude oil and gasoline supplies each rose by about a half-million barrels, DOE said Feb. 5.

Meanwhile, oil prices held around $97 a barrel last week on the New York Mercantile Exchange, as economic reports showed signs of slower growth, in part because of the cold weather.