Diesel Rises 1.3¢ to $3.796; Gasoline Also Gains for Fourth Week
This story appears in the Aug. 6 print edition of Transport Topics.
U.S. retail diesel and gasoline prices rose for the fourth straight week, the Department of Energy reported, although the rate of the increases slowed.
The national diesel average price was $3.796, up 1.3 cents a gallon from the week before, DOE said after its July 30 survey of fueling stations. A year ago, the average price was $3.937. The combined four-week increase now totals 14.8 cents a gallon.
Regular gasoline hit $3.508, an increase of 1.4 cents a gallon; a year ago it was $3.711. The four-week jump for gas has cost consumers 15.2 cents a gallon.
After falling for much of the spring and early summer, prices have begun to climb; both diesel and gas jumped more than 6 cents a gallon in the previous week.
After closing at a recent high of $92.66 on July 19 on the New York Mercantile Exchange, crude oil moved lower, closing below $90 a barrel last week.
“Right now it doesn’t seem to be working,” said Tom Nicholson of truckload carrier Nicholson Transfer & Storage, referring to the pattern of fuel prices following oil prices in a downward path.
An analyst with the Oil Price Information Service said diesel appears to have “more potential for upward momentum” than crude prices be-cause of low domestic inventories of distillate fuel, growing exports of diesel and high global demand.
In addition, the potential for supply disruptions during the August-September hurricane season will also keep diesel prices high, regardless of what happens with crude, said Ben Brockwell, OPIS’ director of data.
“Demand for diesel is stronger globally than it is here in the U.S. now,” Brockwell said, adding that oil companies are using their U.S. refinery capacity to satisfy overseas demand.
Nicholson said his trucking company is constantly coaxing drivers to reduce idling and save in other ways. The fuel surcharge, which changes weekly, is most important, though, but shippers often balk at it.
“Shippers don’t want surprises, and [the surcharge] changes every Tuesday for us. They’re never really happy when it’s going up, but they also never pat you on the back when it’s on the way down,” Nicholson said.
However, Acme Truck Line, La-fayette, La., said it has found its customers more willing to pay a fuel surcharge, said company president Michael Coatney.
“We do expedited flatbed and heavy-haul,” Coatney said, “but nine out of 10 of our trucks are in the oil fields, and they understand the situation.”
Meanwhile, after the United States became a net exporter of refined petroleum for the first time since the Korean War era last year, the trend is accelerating in 2012.
DOE’s Energy Information Ad-ministration said refineries are exporting about 1.1 million barrels of distillate a day, as of July 27. A year ago the level was 797,000 barrels a day.
Brockwell said oil companies generally start accumulating diesel and other distillates in May, but because of a second-quarter tumble in prices, they delayed doing so. That led inventories to decline, contributing to the rise in prices.
U.S. stocks of ultra-low-sulfur distillate were 91.9 million barrels on July 27, EIA said. A year ago the level was 104.2 million barrels, and two years ago it was 108.4 million.
As for the NYMEX crude price, traders said there is not a lot of pressure at the moment for it to surge beyond $90 a barrel.
“The fundamentals don’t support [oil] prices going much higher,” Marshall Berol, a portfolio manager with the Encompass Fund in San Francisco, told Bloomberg News. “The U.S. economy has very modest growth, and Europe is slowing. We need to see increasing growth for prices to rally,” he said of crude prices.
With respect to gasoline prices, Brockwell said there is good news for U.S. consumers in that gas will not necessarily behave as diesel does. While exports are propping up diesel prices, gasoline is a more U.S.-centered product and demand for it is not rising. He said gasoline prices should lag behind diesel in the immediate future.
