By Greg Johnson, Staff Reporter This story appears in the Dec. 3 print edition of Transport Topics.
The U.S. diesel average price rose 5.8 cents a gallon last week to $4.034, its first gain in six weeks, the U.S. Department of Energy reported.
The increase, which pushed commercial trucking’s main fuel back above $4 for the first time since Nov. 5, left the price of diesel seven cents higher than it was at this time in 2011.
Before the increase, diesel had fallen 17.4 cents since a four-year high of $4.15 a gallon, DOE said after its Nov. 26 survey of fueling stations.
DOE also said the average retail gasoline price edged up 0.8 cent to $3.437, the first bump-up in seven weeks. Gasoline is 13 cents higher than the same week a year earlier, according to DOE. In six weeks of declines that began Oct. 8, gasoline had fallen 42.1 cents.
Analysts said the diesel increase was due to increased consumption of distillate fuels, the aftermath of Hurricane Sandy and colder weather.
“A few weeks ago, the worry was about Sandy. Now we’re looking ahead to rebuilding, and supplies of diesel are tight,” said Phil Flynn, senior market analyst for Price Futures Group Inc., Chicago. “This will keep prices up.”
Flynn said inventories of distillate fuel are being affected by problems at some refineries and seasonal use of heating oil.
“We did see, with the market, a little bit of concern about cold weather because supplies on the East Coast are still well below normal,” he said.
Distillate inventories fell by 800,000 barrels last week, the DOE’s Energy Information Administration said Nov. 28. “This is far below average at this time of the year,” Flynn said.
Sean Hill, an analyst with EIA, said crude prices are relatively stable because oil markets have remained in balance the past few months. Only global conflicts or production issues have caused upward price movements, he said.
Although crude rose late last week following the release of positive economic data, it was about $88 a barrel on the New York Mercantile Exchange, still down significantly from the start of the year, according to Bloomberg News.
Hill also said diesel supplies are tight and that consumption has picked up in the past few weeks, probably because of the onset of winter heating season.
“With 600,000 barrels per day in added diesel consumption, prices will creep up a little bit,” he said.
In some areas, they didn’t just creep up.
“We have had a large spike here in the South. Our fuel went from $3.70 to $3.96 almost overnight two weeks ago,” Greg Brown, CEO of B.R. Williams Trucking Inc., an Oxford, Ala., truckload carrier, said on Nov. 28.
“To go . . . higher over such a short period, the fuel surcharge doesn’t catch up to it fast enough,” Brown said.
However, he said prices have dropped back down since then to about $3.74. Historically, prices and surcharges are on the lower end of the scale in the South, Brown said. And although he does anticipate diesel will rise a bit at this time of year because of winter heating season, the recent jump in prices caught everyone by surprise, he said.
Another trucking executive said he has no choice but to roll with increases.
“We keep monitoring our fuel surcharges. That’s all we can do,” said Gerald Krog, owner of Golden Ring Trucking Inc., Fergus Falls, Minn.
