Fuel’s Crystal Ball

This Editorial appears in the May 11 print edition of Transport Topics. Click here to subscribe today.

If you have any doubts about the future direction of fuel prices, pay attention to what’s happening today.

Don’t be lulled by the fact that the average price for a gallon of diesel has declined to $2.185 a gallon, well below the record of more than $4.75 set in July. Don’t let the first whiffs of economic revival mask the inevitable return of fuel-price increases.

A barrel of crude oil on New York’s Mercantile Exchange hit almost $57 last week, reaching its highest trading level since November. Crude prices have now risen 18% during 2009, even as year-over-year demand for diesel is 18% below year-ago levels and as crude stocks have reached their highest levels since 1990.

Last week’s crude prices apparently were sparked, at least in part, by Ben Bernanke, chairman of the Federal Reserve, when he made some very measured statements about what he termed the early stages of economic healing.

Bernanke said the housing market is beginning to stabilize and that the sharp reduction in business inventories noted during the first quarter was apparently nearing an end.

One can only guess what would have happened to crude oil prices if Bernanke had made more positive comments.

Commodities speculators apparently are convinced that the tight supply situation that helped push crude prices to $120 a barrel a year ago will quickly reappear when the worldwide recession ends.

Prudent trucking fleets won’t relax their efforts to improve their fuel efficiency, efforts that began when prices went haywire.

Even as lower prices have made it harder for fleet executives to shell out money to improve fuel use, our fuel story this week shows that some are moving ahead with their efficiency programs. (Click here for p. 1 story.)

Failure to act now could lead to a repeat of what happened to many fleets when fuel prices went on a rampage not so long ago.

As a nation, we are no better prepared to cope today than we were last year, when records were being set even as the world slid into the recession.

Thus, prudent fleet executives need to prepare now for the higher fuel prices that we know are coming.