National Diesel Price Increase Moderates
This story appears in the April 13 print edition of Transport Topics.
The U.S. diesel average inched up last week 0.7 cent a gallon to $2.228, following two weeks of major increases, while the gasoline price dipped, the Department of Energy reported.
Crude oil fluctuated widely, as markets grappled with refinery maintenance schedules, supply reports and speculation the world economy might be improving.
Before the diesel increase last week, commercial trucking’s main fuel had roared up by 20.4 cents a gallon over the two prior surveys, DOE said April 6.
On the same day, DOE’s Energy Information Administration also said gasoline slid 0.9 cent to $2.037 a gallon. Crude oil prices on the New York Mercantile Exchange ranged from $48 to $53 a barrel, settling at $52.24 on April 9.
Diesel fell significantly and consistently from a July 14 record of $4.764 a gallon to a March 16 bottom of $2.017. The national diesel average fell in 33 of 35 weeks during that time, before increasing in each of the past three weeks.
On April 7 last year, the diesel average stood at $3.955, or $1.727 a gallon more than the current level.
Gasoline also plummeted from a July record of $4.114 to a low point of $1.613 a gallon at the end of 2008. After the Dec. 29 survey, gas prices rose for 10 of the next 13 weeks through March 30, before dipping in the most recent survey.
The most recent price is $1.295 lower than the corresponding week in 2008.
Although reports on the continuing drought in tonnage dominate the attention of transportation executives, pump prices never can stray too far from the minds of fleet managers, said Dave Anderson, controller of truckload carrier deBoer Transportation, Blenker, Wis.
“It’s still a very high part of your direct costs. You can never turn away from it completely.
“If it’s not that drastic a change, you can catch up through fuel surcharges, but margins are so thin these days, any increase is a concern,” said Anderson, whose company runs about 450 power units in transporting general commodities.
Beyond the obvious effects of diesel prices, Anderson said he follows oil prices because of their influence on engine oil, tires and other truck parts.
“It’s hard to be too bullish [on oil prices] with inventories approaching a record,” a BNP Paribas Commodity Futures trader in New York told Bloomberg News while prices were moving up on April 8.
EIA said U.S. crude oil stocks rose to 361.1 million barrels on April 3, up from 359.4 million barrels the week before. U.S. gasoline stocks also rose while ultra-low-sulfur distillate stocks — the basis ofdiesel fuel — slipped to 83.5 million barrels on April 3, compared with 86.3 million the week before. The year before the level in reserve was 67 million barrels of diesel.
In its weekly petroleum report issued April 8, EIA said the production of refined products is in a seasonal decline as refiners are conducting needed repairs, calling this “peak refinery maintenance season.”
“But this year has a new wrinkle: the U.S. has less need for petroleum products from our domestic refineries than usual,” the report said, adding that some refiners were doing more maintenance work than usual:
“Valero’s Texas City, Texas, refinery was entirely shut down for 40 days during February and early March; Valero’s Delaware City, Del., refinery was down during much of March and is expected to remain down through most of April; and Total’s Port Arthur refinery was shut down in late March without specifying the full length of the shutdown.”
Valero Energy Corp. and Total Petrochemicals USA are both major U.S. oil refiners.
EIA’s assessment was that the extended maintenance work would not have a significant effect on prices.
“With lower total demand predicted to continue throughout 2009, refinery outages — both planned for maintenance purposes and unplanned — are not expected to have much impact on prices between now and June, even though outages will likely be higher than typical in some months,” the report predicted.
