Fuel Average Slips Below $4, But East Pays Storm Penalty

This story appears in the Nov. 19 print edition of Transport Topics.

The average price for a gallon of retail diesel declined for the fourth straight week, dipping 3 cents to $3.98, which put trucking’s main fuel below the $4 mark for the first time in three months, the Department of Energy reported.

The price of diesel has now fallen 17 cents over those four weekly declines, after hitting a four-year high of $4.15 on Oct. 15.

Diesel also dipped below its year-ago level for the first time since Aug. 6. The fuel is now 0.7 cent cheaper than it was one year ago, according to DOE’s Nov. 12 survey of fueling stations.

Meanwhile, the gasoline average price continued its slide, decreasing 4.3 cents to $3.449 per gallon. Gasoline has now plunged 40.1 cents during a streak of five consecutive weekly declines.

Even so, gasoline is still 1.3 cents higher than its price a year ago.

Timothy Hess, an analyst for DOE’s Energy Information Administration, said low crude oil prices are bringing down the cost of fuel.

“We’ve seen some weakness in the crude market that’s been finding its way into the product market,” he said. Compared with a month ago, he said, “the whole crude market is down about $7 a barrel. That’s giving you a lot of the declines you’re seeing.”

Since Oct. 23, crude has generally hovered between $84 and $87 per barrel on the New York Mercantile Exchange, except for a minor spike to $88.71 on Election Day.

The price fell $6.37 in a span of four business days after closing at $92.10 on Oct. 18, but has held relatively steady since then.

But while the national diesel average has declined 5 cents in the two weeks since Superstorm Sandy hit the East Coast on Oct. 29, truckers in the areas hit hardest haven’t seen the same amount of price relief as the rest of the country.

Diesel prices in DOE’s Central Atlantic region rose 1.6 cents during the same two-week timeframe.

Hess tied the regional discrepancy to increased demand for diesel from truckers, especially those who are delivering gasoline to relieve supply shortages.

Port infrastructure and pipeline problems caused by the storm have made it more difficult to bring products into the region, Hess said, “which is why you’re seeing stuff getting trucked in from longer distances, especially gasoline.”

One carrier in the area said the main problem wasn’t the price of diesel, but its availability.

Tom Heimgartner, president of drayage carrier Best Transportation Inc., Newark, N.J., said his company filled two 6,000-gallon tank trucks with diesel before Sandy made landfall.

Despite higher diesel prices, limited fuel availability and storm-related demurrage charges, “we’ve managed to squeak by,” he said.

The storm-related closing of the Phillips 66 Bayway refinery in Linden, N.J., and damage to Motiva Enterprises storage tanks in Sewaren, N.J., contributed to fuel supply problems.

In one response to the storm, the Energy Department announced Nov. 9 that it would release 4.2 million gallons of ultra-low-sulfur-diesel fuel from the Northeast Home Heating Oil Reserve to help distributors in Connecticut address fuel shortages in the state.

Energy Secretary Steven Chu said the loan “will help ensure communities in the impacted area have access to the diesel fuel they need for their transportation systems.”

Michael Riley, president of the Motor Transport Association of Connecticut, said concerns about the diesel supply were most acute right after the storm.

“The underlying concern was that we had enough diesel to continue to move the gasoline trucks,” he said. “As far as I know, that did not get to the crisis level, but it was a very real worry.”

The bigger supply challenge was the scarcity of gasoline, Riley said.

“It was pandemonium right after the storm because the New York market was screaming for product,” Riley said. “We had people from out of state following Connecticut tank trucks around, hoping that they would lead them to a place where there would be gasoline.”

He said one company told him that when a tank truck driver pulled into a gas station, everyone in line got out of their cars and clapped for him.

Riley also said the state granted a weight waiver, allowing tankers to carry up to 100,000 pounds rather than the normal limit of 80,000 pounds, which “helped significantly in making the distribution system in response to the storm more efficient.”

The waiver, which lasts until the end of this month, also applies to carriers responding to the emergency with other supplies, such as water, food and sandbags, he said.

Staff Reporter Greg Johnson contributed to this story.