Diesel Slips Under $4 a Gallon

By Transport Topics Staff

This story appears in the Sept. 29 print edition of Transport Topics.

Diesel fuel’s national average price fell 6.5 cents to $3.958 a gallon, the 10th straight weekly decline and the first time it has fallen below the $4 mark in almost six months, the Department of Energy said Sept. 22, although a surge in crude oil prices added uncertainty to the outlook.

And after jumping almost 19 cents the previous week, gasoline fell back 11.7 cents to $3.718 a gallon, even as the Southeast saw some shortages following Hurricane Ike’s landfall near Houston earlier this month.

The price of trucking’s main fuel has fallen more than 80 cents from the $4.764 record that it climbed to July 14, but the decline last week left the price of diesel 92.6 cents higher than the same week last year.

One fleet executive said last week that, despite the recent price slide, carriers needed to remain vigilant about fuel-saving measures.

“It’s great that diesel has been falling, but I don’t see it dropping enough to make any real difference to the problems we face,” Cameron Fraley, chief operating officer of Halvor Lines Inc., Superior, Wis., said Sept. 22 at an Atlanta fuel conference sponsored by the Oil Price Information Service.

DOE released its latest pump-price survey the same day as the biggest single-day increase ever for crude oil — soaring $16.37 on the New York Mercantile Exchange to more than $120 a barrel on concerns over the federal government’s $700 billion plan to bolster the U.S. economy, Bloomberg News reported.

Oil receded the next day to about $107 a barrel, where it remained late into the week.

“No matter how low diesel falls, we’re not going back to the old ways,” Wade Gunter, Birmingham operations manager of flatbed carrier Boyd Bros. Transportation, Clayton, Ala., said at the OPIS conference.

“We bought a simulator in August solely to train our drivers to save fuel,” Gunter told Transport Topics. “The trainer takes drivers out in their own trucks to show them how they’re wasting fuel.”

Earlier this year, Boyd Bros. cut the top limit on its speed governors to 62 miles per hour from 65 mph, imposed rules to drastically cut idling time and instituted progressive shifting techniques for its 770 drivers, Gunter said.

In progressive shifting, drivers change gears upward as early as possible when accelerating, when the engine and transmission should be operating at or near their lowest manufacturer-recommended speeds, decreasing fuel consumption.

“I only wish now that we put in more drastic steps when diesel prices were jumping” earlier in the summer, he added.

Meanwhile, speaking on behalf American Trucking Associations, a top trucking official last week urged Congress and the Bush administration to implement a comprehensive energy plan to help ensure an affordable supply of oil and to limit the effects of rising fuel costs on the overall economy.

“The fuel crisis we face today is severe [and the] dramatic year-over-year increase in the cost of diesel fuel is harmful to the trucking industry and the U.S. economy,” Barbara Windsor, chief executive officer of Hahn Transportation Inc., New Market, Md., told the Senate Energy and Natural Resources Committee Sept. 23 (see story, p. 23).

One fuel executive said the Sept. 22 spike may have been due in part to the expiration of the Nymex October futures contract, as the November contract started the next day.

“That was extraordinary volatility, though,” Bruce Gress, director of petroleum risk management for Pilot Travel Centers, said at a separate fuel conference in Atlanta sponsored by truckload carrier Schneider National.

Meanwhile, sporadic gasoline shortages continued in the Southeast last week — including in Atlanta and Nashville, Tenn. — as pipelines from the Gulf Coast struggled to get back to full production following Hurricane Ike, which hit the coast near Houston on Sept. 13, The Associated Press reported.

Analysts said the shortages should ease by this week, after the region’s refineries resume normal production levels, while Exxon Mobil Corp.’s refinery east of Houston, the nation’s largest, continued reduced output last week, AP said.

Gasoline fell almost 40 cents from its $4.114 record set July 7, and it was 90.6 cents more expensive than the same week a year ago, according to DOE figures.

Written by Staff Reporter Michael G. Malloy, with reporting from Atlanta by Associate News Editor Jonathan S. Reiskin and Staff Reporter Frederick Kiel.