Diesel Prices Dip 2.2¢ to $3.897; Gasoline Declines for 5th Week

This story appears in the Oct. 14 print edition of Transport Topics.

The national diesel price average slipped 2.2 cents to $3.897 a gallon last week, the first time it has declined at least four straight weeks since early July, the Department of Energy reported.

Diesel has dipped a cumulative 8.4 cents over the past month, DOE said after its Oct. 7 survey of fueling stations. Although trucking’s main fuel fell six straight weeks between May and July, that combined total was only 7.3 cents.

The retail gasoline average, meanwhile, declined for a fifth consecutive week, dropping 5.8 cents to $3.367 a gallon. The downturn followed a 7-cent decline the previous week.

Diesel is 19.7 cents below the corresponding week of last year, while gas is 48.3 cents below a year ago, DOE said.

Sean Hill, an analyst in DOE’s Energy Information Administration, attributed the latest decline to lower oil prices. Crude fell to a three-month low near $101 a barrel last week on the New York Mercantile Exchange.

Looking ahead, he said, “We expect crude to continue to fall slowly” in the near term, and then “we would expect some tightness in the diesel market with the weather getting colder.”

DOE released last week’s survey despite the partial government shutdown. An EIA official said the agency might not be able to release additional surveys until the shutdown ends.

“EIA was fortunate enough to have sufficient funding that wasn’t tied to any year’s appropriations, which allowed us to keep operating,” agency spokesman Jonathan Cogan said.

The agency’s funding was scheduled to run through Oct. 11, Cogan told Transport Topics.

An industry executive said last week that stopping the survey would confound carriers, as many base their fuel surcharges on DOE’s national and regional prices.

“The motor carrier industry relies on DOE’s report released each Monday,” said Tom Swartz, principal of Federal Logistic Solutions, a Crofton, Md.-based transportation consulting business.

“They are a key element written into transportation contracts and even part of the pricing agreements between transportation service providers and federal government agencies,” Swartz said.

Another executive said it remains difficult to figure out why diesel prices move erratically.

“Unfortunately, we don’t understand why fuel prices move up so fast and down so slow,” said Volker Schurr, general manager of truckload carrier Direct Transport Services, based in Commerce City, Colo. “The oil companies will use any excuse they can to boost [the price] up, but it won’t come down as much.”

Direct Transport Services, which has a 35-truck fleet that generally runs within 1,000 miles of its headquarters, buys fuel in bulk for a “substantial discount,” storing 16,000 gallons on site, Schurr said.

“We buy it much cheaper than the national average, and we always fuel prior to leaving our facility,” he said, estimating that its trucks get about 65% of their diesel from its in-house fuel depot.

DOE’s Rocky Mountain region price declined by the least of its five national regions last week, dipping 1.2 cents to $3.915 a gallon, the second-highest price behind the West Coast’s $4.052.

EIA also reported last week that crude oil inventories rose by the most in a year in the week ended Oct. 4, jumping 6.8 million barrels to 370 million barrels.

Gasoline inventories edged up 150,000 barrels to 220 million, while distillate supplies declined 3.1 million barrels to 326 million.

“Diesel inventories are low compared with the last five years, but they’re still higher than they were last year,” EIA’s Hill said. “They were especially low last year heading into the heating oil season.”

EIA said in a separate report that diesel will average $3.89 in the fourth quarter, in line with its current price.

It will decline to an average of $3.76 next year, 6 cents below last month’s forecast, the agency said in its latest short-term energy outlook.

Gasoline, which averaged $3.53 in September, will average $3.34 in the fourth quarter, down a dime from last month’s forecast, and will average $3.40 in 2014, EIA said.

Crude oil prices, meanwhile, fell to a three-month low last week, closing at $101.61 a barrel Oct. 9 on the New York Mercantile Exchange, Bloomberg News reported.

Prices declined in part due to concerns about the effects of the partial government shutdown, but rebounded $1.40 to finish Nymex trading at $103.01 on Oct. 10, Bloomberg reported.