Diesel Rises 3.2¢ to $2.528

This story appears in the Aug. 3 print edition of Transport Topics.

The U.S. average retail diesel price rose 3.2 cents a gallon last week to $2.528, the first increase in five weeks, the Department of Energy reported.

The average gasoline price also increased for the first time in five weeks, gaining 4 cents to $2.503 a gallon, DOE said July 27 after its weekly survey of fueling stations.

“The rise in the price of crude was the main reason for the increase in retail prices, but also the futures prices for the products themselves also went up after the Fourth of July holiday,” Phil Flynn, energy analyst at Peregrine Financial Group Inc., told Transport Topics.

While crude had been increasing during much of July, it reversed course last week, which analysts attributed to concerns that a slow recovery from the recession will undermine demand.

Retail diesel, meanwhile, fell 12 cents during the previous four weeks, while gasoline dropped 22.8 cents over that same period.

Despite last week’s gains at the pump, diesel still was $2.075

less expensive than the corresponding week a year earlier, which was two weeks after it hit a record $4.771 a gallon on July 14, 2008.

Similarly, gasoline was selling for $1.452 a gallon cheaper than the corresponding week a year ago.

Last week, truckers paid $505.60 to fill up the two 100-gallon diesel tanks based on the national average, compared with $954.19 when diesel was at its peak last summer. American Trucking Associations estimates that the U.S. trucking industry uses 752 gallons of diesel weekly and 285 million gallons of gasoline.

Erv Wagner, corporate traffic supervisor for Dart Container Corp. of California, said that “things seemed to be close to normal about our fuel practices from the time of nearly $5 diesel last summer.”

“We have bulk fuel facilities in 12 locations . . . so we never had to pay pump prices for diesel, but what we did was to not keep those facilities full when diesel was at its highest,” Wagner told TT. “We’ve gone back to topping them off to keep all full this year, with the drop in diesel prices.”

The company runs about 475 trucks and 800 trailers nationwide, mainly to deliver its own products, though it also will accept some loads to avoid deadhead miles.

The company has not put speed governors on its trucks but did hold classes to instruct drivers on the waste of fuel that came with idling engines last year, Wagner said.

“That’s one practice that we’ve continued, even after prices came down, because it does save a lot of fuel,” Wagner said.

Geoff Baker, president of McFarland Truck Lines, Austin, Minn., also said the fleet has maintained practices put in place last year.

“We lowered our fleet speed to 65 [mph],” Baker told TT. “Secondly, we paid a monthly incentive on reducing idling to drivers, and we also went . . . near 100% with auxiliary power units.”

“We’ve kept all that in place, and just deal with the weekly swing in the fuel surcharges,” Baker said. “We don’t make any money with the surcharge, and even lose money, because of deadhead miles and if the price jumps after we announced that week’s surcharge.”

Meanwhile, the price of crude on the New York Mercantile Exchange closed at $64.44 on July 30. It fell near $63 earlier in the week, about $10 lower than its recent peak in mid-June.

Domestic crude inventories rose by 5.1 million barrels to 347.8 million barrels in the week ended July 24, DOE reported, as imports hit a six-month high and refiners cut processing rates.

Laurie Falter, an economist with DOE’s Energy Information Administration, said she expected “crude prices will stay about where they are now . . . through the end of the summer, without the unexpected happening.”

In addition, Flynn suggested the rise in pump prices should be short lived.

“Retail prices may rise over the next few weeks, but I still think the longer trend will be down,” Flynn said. “Demand for diesel is still very weak, and we have plenty of diesel stocks.”

The spread between the two fuels’ retail prices was much wider last year, with gasoline’s all time high reaching only $4.165 a gallon on July 7, 2008.