Fuel Prices Skyrocket
Diesel Jumps 18.2¢ to $4.331; Gas Up 10.9¢
By Dan Leone, Staff Reporter
This story appears in the May 19 print edition of Transport Topics.
Retail fuel prices around the nation soared last week, setting new records for diesel and gasoline, according to the Department of Energy’s weekly survey of filling stations.
The average price of diesel jumped 18.2 cents last week to $4.331 a gallon, the biggest weekly gain since October 2005.
Also last week, the average price of regular gasoline surged another 10.9 cents a gallon to $3.722, its seventh consecutive record, DOE said after its May 12 survey.
Laurie Falter, an analyst with DOE’s Energy Information Administration, said historically high oil prices, strong global demand and tight domestic supplies were all factors behind the record fuel levels.
She suggested diesel remains so much higher than gasoline because refineries “can’t make more distillate without making more gasoline.”
A typical refiner’s yield from one barrel of crude includes about 19.4 gallons of gasoline but only about 7.8 gallons of diesel, according to EIA.
“All the infrastructure in the refineries is geared towards gasoline production,” Falter said.
DOE said diesel’s fourth increase in five weeks moved it 15.4 cents a gallon above its previous record, set April 28, and made it $1.558 more expensive than this time last year.
The 18.2-cent spike was the third-largest gain on record, surpassed only by two jumps of more than 30 cents a gallon following a string of hurricanes in 2005 that pummeled the oil-producing Gulf Coast region.
At a weekly burn rate of about 730 million gallons, that means the trucking industry last week paid about $1.1 billion more for diesel than it did in the corresponding week of 2007.
That $1.1 billion would have been enough to pay the industry’s entire inflation-adjusted weekly diesel bill in the corresponding week of 2000, when diesel cost about $1.40 a gallon, according to DOE figures.
Gasoline, meanwhile, is now 61.9 cents a gallon more expensive than this time last year, meaning that the trucking industry last week paid $179 million more for gasoline than it did a year ago. The industry burns about 290 million gallons of gas a week.
With fuel remaining at record levels, one trucking executive outlined the extreme steps his company is taking to free up cash for fuel.
“We’ve parked trucks, we’ve leaned down the office [and used] every resource that we have to allow us enough cash for fuel,” said Wes Sterenberg, chief operating officer of truckload carrier Koleaseco Inc., Hudsonville, Mich.
Sterenberg said the carrier recently cut its fleet of 100 tractors to 85.
Since March, Koleaseco drivers have been required to fill up at stations where it has signed fuel purchase contracts, said Sterenberg.
Doing so saves the company “anywhere in the range of 10 to 14 cents a gallon from the DOE national average.” That translates to a savings of about $20 to $28 on every 200-gallon fill-up.
Record diesel prices have also forced one large Canadian carrier, which runs about half of its miles within the United States, to take action on fuel conservation.
Truckload carrier Bison Transport, Winnipeg, Manitoba, announced May 15 that it will lower the maximum speed of its 1,050-truck fleet to about 62 mph from about 65 mph, and install aerodynamic skirts on its 3,000 trailers.
Jon Sigurd, Bison’s manager of driver services, told Transport Topics these initiatives will save the carrier “about 2 million to 3 million liters [440,000 to 660,000 gallons] of fuel a year, when it’s all said and done.”
At last week’s price, that is a reduction of $1.9 million to $2.9 million in Bison’s annual diesel bill.
Parcel carrier FedEx Corp. said record fuel prices are the main reason it was cutting its quarterly earnings forecast (click here for related story).
“While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices,” Alan Graf, FedEx’s chief financial officer, said in a statement.
Crude oil last week backed off from a May 9 record of $125.96 a barrel, but at more than $122 a barrel on the New York Mercantile Exchange on May 15, crude was still nearly $60 higher than a year earlier.
In an attempt to provide some relief, both houses of Congress last week approved a measure to suspend shipments to the Strategic Petroleum Reserve until the end of the year.
This story appears in the May 19 print edition of Transport Topics.
Retail fuel prices around the nation soared last week, setting new records for diesel and gasoline, according to the Department of Energy’s weekly survey of filling stations.
The average price of diesel jumped 18.2 cents last week to $4.331 a gallon, the biggest weekly gain since October 2005.
Also last week, the average price of regular gasoline surged another 10.9 cents a gallon to $3.722, its seventh consecutive record, DOE said after its May 12 survey.
Laurie Falter, an analyst with DOE’s Energy Information Administration, said historically high oil prices, strong global demand and tight domestic supplies were all factors behind the record fuel levels.
She suggested diesel remains so much higher than gasoline because refineries “can’t make more distillate without making more gasoline.”
A typical refiner’s yield from one barrel of crude includes about 19.4 gallons of gasoline but only about 7.8 gallons of diesel, according to EIA.
“All the infrastructure in the refineries is geared towards gasoline production,” Falter said.
DOE said diesel’s fourth increase in five weeks moved it 15.4 cents a gallon above its previous record, set April 28, and made it $1.558 more expensive than this time last year.
The 18.2-cent spike was the third-largest gain on record, surpassed only by two jumps of more than 30 cents a gallon following a string of hurricanes in 2005 that pummeled the oil-producing Gulf Coast region.
At a weekly burn rate of about 730 million gallons, that means the trucking industry last week paid about $1.1 billion more for diesel than it did in the corresponding week of 2007.
That $1.1 billion would have been enough to pay the industry’s entire inflation-adjusted weekly diesel bill in the corresponding week of 2000, when diesel cost about $1.40 a gallon, according to DOE figures.
Gasoline, meanwhile, is now 61.9 cents a gallon more expensive than this time last year, meaning that the trucking industry last week paid $179 million more for gasoline than it did a year ago. The industry burns about 290 million gallons of gas a week.
With fuel remaining at record levels, one trucking executive outlined the extreme steps his company is taking to free up cash for fuel.
“We’ve parked trucks, we’ve leaned down the office [and used] every resource that we have to allow us enough cash for fuel,” said Wes Sterenberg, chief operating officer of truckload carrier Koleaseco Inc., Hudsonville, Mich.
Sterenberg said the carrier recently cut its fleet of 100 tractors to 85.
Since March, Koleaseco drivers have been required to fill up at stations where it has signed fuel purchase contracts, said Sterenberg.
Doing so saves the company “anywhere in the range of 10 to 14 cents a gallon from the DOE national average.” That translates to a savings of about $20 to $28 on every 200-gallon fill-up.
Record diesel prices have also forced one large Canadian carrier, which runs about half of its miles within the United States, to take action on fuel conservation.
Truckload carrier Bison Transport, Winnipeg, Manitoba, announced May 15 that it will lower the maximum speed of its 1,050-truck fleet to about 62 mph from about 65 mph, and install aerodynamic skirts on its 3,000 trailers.
Jon Sigurd, Bison’s manager of driver services, told Transport Topics these initiatives will save the carrier “about 2 million to 3 million liters [440,000 to 660,000 gallons] of fuel a year, when it’s all said and done.”
At last week’s price, that is a reduction of $1.9 million to $2.9 million in Bison’s annual diesel bill.
Parcel carrier FedEx Corp. said record fuel prices are the main reason it was cutting its quarterly earnings forecast (click here for related story).
“While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices,” Alan Graf, FedEx’s chief financial officer, said in a statement.
Crude oil last week backed off from a May 9 record of $125.96 a barrel, but at more than $122 a barrel on the New York Mercantile Exchange on May 15, crude was still nearly $60 higher than a year earlier.
In an attempt to provide some relief, both houses of Congress last week approved a measure to suspend shipments to the Strategic Petroleum Reserve until the end of the year.
