U.S. Diesel Average Up 2.2¢

 By Michael G. Malloy, Staff Reporter

This story appears in the Dec. 2 print edition of Transport Topics.

The average price of a gallon of diesel around the nation rose last week for the first time in almost three months, gaining 2.2 cents to $3.844 a gallon, while gasoline had its biggest increase since July, the Department of Energy reported Nov. 25.

Regular-grade gasoline jumped 7.4 cents to $3.293 a gallon, DOE said following its weekly survey of filling stations. It was the motor fuel’s second straight gain, and followed a 2.5-cent bump the previous week.

The diesel increase was the first in 12 weeks, after declines in nine of the previous 11 weeks, and was unchanged in the other two. Despite last week’s upturn, the pump price remained 19 cents below a year ago.

Prior to the increase, trucking’s primary fuel had fallen about 16 cents since early September, when it was just under $4.

Much of the demand for diesel is being driven by U.S. exports, one DOE analyst said last week.

“Lower levels of inventories for diesel and gasoline, and more exports of diesel, are all factors in pushing the price higher,” said Sean Hill, an analyst with DOE’s Energy Information Administration, which publishes the weekly pricing survey.

The diesel and gas increases were not surprising, given higher Brent crude oil prices in the past month, he told Transport Topics following the release of the survey.

While benchmark West Texas Intermediate crude oil, which is traded on the New York Mercantile Exchange, has held in the low- to mid-$90s per barrel for about the past month, globally traded Brent crude oil prices have been rising.

“Brent has risen from $103 to $111 in the past month [and] is still setting the global market on what is paid for crude oil,” Hill said.

Diesel rose 3.5 cents in DOE’s Midwest region, the biggest regional increase, to $3.829 a gallon. The West Coast region’s price was flat at $3.954, although that was the highest price among DOE’s five national regions.

“The price has jumped in our area,” Midwest-based trucking executive Valerie Bammer said last week, with the wholesale price spiking almost 20 cents a gallon in the past two weeks for the company’s diesel purchases for its on-site tanks.

The bulk price rose to $3.742 a gallon Nov. 25 from about $3.50 in mid-November, said Bammer, who tracks fuel prices for Kenosha, Wis.-based refrigerated truckload carrier Birchwood Transport Inc.

Birchwood has an on-site 10,000-gallon tank at its home location between Milwaukee and Chicago, which helps it save money by avoiding on-road fuel purchases, Bammer said.

Meanwhile, analyst Trilby Lundberg, who publishes the semimonthly Lundberg Survey that tracks national gasoline prices, said higher gas costs “signal the end of the price cutting,” Bloomberg News reported following the survey’s Nov. 24 release, which showed that prices rose in the previous two-week period.

“Refiner margins are still squeezed, and retailers are paying higher wholesale prices, so they’re getting squeezed,” Lundberg told Bloomberg. “There’s probably another 5- to 10-cent increase to come [at the pump] even if crude oil prices don’t jump higher.”

Including the previous week’s 2.5-cent bump, gasoline has bounced higher by almost 10 cents in the past two weeks, although it is about 30 cents below its level on Labor Day. Last week, gas was 14.4 cents below its price of a year ago.

Gasoline futures on Nymex rose 17.3 cents, or 6.8%, in the two weeks ended Nov. 22 as refinery outages and longer-than-expected plant turnarounds reduced supplies, Bloomberg reported.

Gasoline inventories fell 345,000 barrels in the week ended Nov. 15 to 208.9 million barrels, the lowest in almost a year, according to EIA figures. Last week’s DOE report on diesel, gasoline and crude oil inventories was not released in time for TT’s deadline.

Benchmark WTI crude oil futures finished the trading day Nov. 26 at $93.68 a barrel on Nymex.