Diesel Slips 1.9¢; Gas Hits Record
By Andrea Fischer, Staff Reporter
This story appears in the May 21 print edition of Transport Topics. Click here to subscribe today.
The U.S. average price paid for retail diesel fuel fell another 1.9 cents last week to $2.773 a gallon, while the average gasoline price rose 4.9 cents to an all-time record of $3.103, according to the Department of Energy.
The decline in the diesel average was the fourth straight — totaling 10.4 cents — since reaching $2.877 on April 16, the highest level this year. Despite that decline, diesel is up 36 cents a gallon since bottoming out at $2.413 on Jan. 29 and is 14.7 cents lower than the corresponding week of last year.
The gasoline average, meanwhile, is now 3.4 cents higher than the previous record of $3.069, set in September 2005, following Hurricane Katrina. Gasoline has increased 93.8 cents a gallon since reaching the year’s low on Jan. 22 and is 15.6 cents higher than the corresponding week a year ago.
The gas average is now 33 cents higher than diesel, the largest spread ever between the two fuels when gas is the higher of the two. On Oct. 24, 2005, following hurricanes Katrina and Rita, the diesel average was a record 55.4 cents higher than gasoline.
“For much of the last few years, diesel prices have been at a premium compared to gasoline because there is traditionally more demand for diesel,” said Doug MacIntyre, a fuel analyst with DOE’s Energy Information Administration. “The big reason there is such a difference right now isn’t that diesel demand has fallen below gasoline demand; it’s that very little gasoline is available, but there is plenty of diesel. So, gasoline prices have shot up and diesel prices have fallen in relation to gasoline.”
Diesel inventories are 22% above their historical levels for this time of year, but gasoline inventories are nearly 8% below, MacIntyre added.
One owner-operator said the rising cost of fuel has forced him to stay on the road instead of returning home between runs, and has him “scrambling” to find freight to make ends meet.
“I spend my time now hustling loads — it’s the way I deal with high fuel costs,” said Lee Klass, a Portland, Ore., independent truck driver. “I’m always scrambling to get something lined up so that when I get to [my] destination I have freight for my return trip.”
Klass said he plans to spend about $1,600 to make a recently scheduled run from Providence, R.I., to Seattle. He estimated the same 3,000-mile trip cost him about $1,400 a year ago.
“I was going to go home after this one, but I really can’t afford it now. I need to find another load to make ends meet,” said Klass. “I’m getting a fuel surcharge, but I’m still taking a big hit.”
Similarly, Tex Pitfield, president of Saraguay Petroleum, an Atlanta fuel hauler, said his company is “keeping up with our fuel cost by collecting a surcharge on every load.”
Although his company uses only diesel to make deliveries with his heavy trucks, Pitfield said rising gasoline prices were also affecting the company’s daily operations.
“As a fuel provider, we’re seeing more and more [retail] stations holding off on gasoline orders until the last minute for price reasons — and that makes dispatching very difficult,” said Pitfield. “Stores are running out of gasoline. . . .”
John Felmy, chief economist with the American Petroleum Institute, said the strain on gasoline supply should ease as im-ports increase.
“We’ve gone from about 900,000 barrels a day [in imports] to 1.1 million within five weeks — it takes awhile for that supply to move through the system, and we just haven’t seen the effects yet,” he said. At the same time, “de-mand for diesel has been high for quite a while, and we are seeing the effects of that now. Suppliers responded to that higher demand at the beginning of the year with increased diesel production, so now we have more supply — the reason diesel prices are lower.”
DOE said May 16 that domestic gasoline stocks increased 1.7 million barrels to 195.2 million barrels in the latest week, the second gain in 14 weeks, while distillate stocks increased 1.1 million barrels to 119.9 million barrels.
Following the report, and news that protesters in Nigeria had left a facility run by Royal Dutch Shell — allowing the refinery to reopen — crude oil prices fell briefly on the New York Mercantile Exchange May 16, before climbing $2.33 to close at $64.88 a barrel May 17, Bloomberg News reported.
Also last week, EIA administrator Guy Caruso told the Senate Energy Committee the United States has insufficient oil refining capacity. He warned that the country is still not prepared to deal with events — such as another hurricane on the Gulf Coast or a terrorist attack — that have the potential to disrupt the U.S. fuel supply.
When asked why gasoline prices have reached historic highs, Caruso replied that gasoline inventories, “which normally build in April, were affected by refinery outages and low imports,” contributing to “sharp price pressure.”
This story appears in the May 21 print edition of Transport Topics. Click here to subscribe today.
The U.S. average price paid for retail diesel fuel fell another 1.9 cents last week to $2.773 a gallon, while the average gasoline price rose 4.9 cents to an all-time record of $3.103, according to the Department of Energy.
The decline in the diesel average was the fourth straight — totaling 10.4 cents — since reaching $2.877 on April 16, the highest level this year. Despite that decline, diesel is up 36 cents a gallon since bottoming out at $2.413 on Jan. 29 and is 14.7 cents lower than the corresponding week of last year.
The gasoline average, meanwhile, is now 3.4 cents higher than the previous record of $3.069, set in September 2005, following Hurricane Katrina. Gasoline has increased 93.8 cents a gallon since reaching the year’s low on Jan. 22 and is 15.6 cents higher than the corresponding week a year ago.
The gas average is now 33 cents higher than diesel, the largest spread ever between the two fuels when gas is the higher of the two. On Oct. 24, 2005, following hurricanes Katrina and Rita, the diesel average was a record 55.4 cents higher than gasoline.
“For much of the last few years, diesel prices have been at a premium compared to gasoline because there is traditionally more demand for diesel,” said Doug MacIntyre, a fuel analyst with DOE’s Energy Information Administration. “The big reason there is such a difference right now isn’t that diesel demand has fallen below gasoline demand; it’s that very little gasoline is available, but there is plenty of diesel. So, gasoline prices have shot up and diesel prices have fallen in relation to gasoline.”
Diesel inventories are 22% above their historical levels for this time of year, but gasoline inventories are nearly 8% below, MacIntyre added.
One owner-operator said the rising cost of fuel has forced him to stay on the road instead of returning home between runs, and has him “scrambling” to find freight to make ends meet.
“I spend my time now hustling loads — it’s the way I deal with high fuel costs,” said Lee Klass, a Portland, Ore., independent truck driver. “I’m always scrambling to get something lined up so that when I get to [my] destination I have freight for my return trip.”
Klass said he plans to spend about $1,600 to make a recently scheduled run from Providence, R.I., to Seattle. He estimated the same 3,000-mile trip cost him about $1,400 a year ago.
“I was going to go home after this one, but I really can’t afford it now. I need to find another load to make ends meet,” said Klass. “I’m getting a fuel surcharge, but I’m still taking a big hit.”
Similarly, Tex Pitfield, president of Saraguay Petroleum, an Atlanta fuel hauler, said his company is “keeping up with our fuel cost by collecting a surcharge on every load.”
Although his company uses only diesel to make deliveries with his heavy trucks, Pitfield said rising gasoline prices were also affecting the company’s daily operations.
“As a fuel provider, we’re seeing more and more [retail] stations holding off on gasoline orders until the last minute for price reasons — and that makes dispatching very difficult,” said Pitfield. “Stores are running out of gasoline. . . .”
John Felmy, chief economist with the American Petroleum Institute, said the strain on gasoline supply should ease as im-ports increase.
“We’ve gone from about 900,000 barrels a day [in imports] to 1.1 million within five weeks — it takes awhile for that supply to move through the system, and we just haven’t seen the effects yet,” he said. At the same time, “de-mand for diesel has been high for quite a while, and we are seeing the effects of that now. Suppliers responded to that higher demand at the beginning of the year with increased diesel production, so now we have more supply — the reason diesel prices are lower.”
DOE said May 16 that domestic gasoline stocks increased 1.7 million barrels to 195.2 million barrels in the latest week, the second gain in 14 weeks, while distillate stocks increased 1.1 million barrels to 119.9 million barrels.
Following the report, and news that protesters in Nigeria had left a facility run by Royal Dutch Shell — allowing the refinery to reopen — crude oil prices fell briefly on the New York Mercantile Exchange May 16, before climbing $2.33 to close at $64.88 a barrel May 17, Bloomberg News reported.
Also last week, EIA administrator Guy Caruso told the Senate Energy Committee the United States has insufficient oil refining capacity. He warned that the country is still not prepared to deal with events — such as another hurricane on the Gulf Coast or a terrorist attack — that have the potential to disrupt the U.S. fuel supply.
When asked why gasoline prices have reached historic highs, Caruso replied that gasoline inventories, “which normally build in April, were affected by refinery outages and low imports,” contributing to “sharp price pressure.”
