US Diesel Average Declines 2.4¢ to $3.886

This story appears in the Jan. 20 print edition of Transport Topics

The average price of diesel fell 2.4 cents to $3.886 a gallon, its first decline in four weeks, the Department of Energy reported Jan. 13.

Likewise, gasoline dipped for the first time in four weeks, slipping a half-cent to $3.327, DOE said.

Diesel had gained almost 4 cents in its three previous increases, but its price has been generally stable since November, with last week’s about equal to its $3.87 average of the past two months.

Diesel’s pump price was 0.8 cent below its level of the corresponding week last year, while gas — which had jumped more than 9 cents in its three upturns — was 2.4 cents higher than a year ago.

The latest declines coincided with the lowest oil prices in eight months, of below $92 a barrel, along with continued high U.S. oil production, which held at a 25-year high.

One analyst said last week that he expects trucking to benefit from the strong domestic crude production, which continued despite declines in oil and diesel inventories last week.

“The big picture is still very good for diesel and the truckers,” said Phil Flynn, senior market analyst with Price Futures Group in Chicago.

“The relationship between diesel and the weather is changing. We don’t think of it the same way we used to, when heating oil was the main concern,” he told Transport Topics on Jan. 15.

Because diesel and heating oil are both distillate fuels, they traditionally have competed for base fuel stock in the winter, which often boosts diesel’s price in cold-weather months.

One Texas trucking executive said last week that he has noticed lower prices recently, while continuing to take measures to reduce costs.

“We’re seeing prices going down just a shade,” said David Schnautz, general manager with Clark Freight Lines in Pasadena, Texas.

“We get most of our fuel discounted through truck stops,” Schnautz said. The truckload carrier has 180 trucks in its fleet, with about 30 company power units and the rest owner-operators.

Although Clark runs nationally, it catches a modest break in its home region, as DOE’s Gulf Coast region had the lowest diesel prices of its five national regions last week, at $3.78 a gallon.

That was a dime cheaper than the next-lowest region, the Rocky Mountains, where the price matched the national average $3.886.

Clark also saves about 20 cents by using on-site fuel tanks at its headquarters, and the carrier began using full-length fairings underneath some of its trailers about two months ago.

While the results have been “nonscientific” to date, Schnautz said his drivers and owner-operators using the fairings have noticed they are going farther on a tank of fuel between fill-ups.

Clark also uses onboard generator sets, “which save a lot of fuel,” and just ordered 10 new trailers with single wide-base tires, Schnautz said.

Meanwhile, DOE reported last week that oil and distillate supplies fell for the week ended Jan. 10, with crude inventories dropping 7.7 million barrels and distillates down 1 million barrels.

Those levels contrasted with analysts’ forecasts of a 1.3 million-barrel crude draw and a 1.3 million-barrel gain in distillate supplies, Bloomberg News reported.

Gasoline supplies were the exception, gaining 6.2 million barrels and topping the 2.5 million-barrel rise forecast by analysts.

“The distillate draw was kind of disappointing . . . [but] with oil production at the highest level since 1988, I still believe the overall [price] is going to come down,” Flynn told TT.

Oil closed below $92 a barrel  Jan. 9 and Jan. 13 — the first times crude futures have finished below that level on the New York Mercantile Exchange since May, according to Bloomberg figures.

Positive economic reports last week helped push oil prices higher, with crude rising $1.58 to close at $94.17 a barrel Jan. 15, the highest since Jan. 2.

Flynn attributed that bump to reports, including one issued on New York state manufacturing by the Federal Reserve on

Jan. 15, that showed the highest level of factory activity in a year.

He added that, while slightly higher oil prices could lead to a modest short-term increase in fuel prices, the overall longer-term trend was down.

Gasoline, meanwhile, fell slightly from the previous week’s price, which had been the highest since October.

Despite that, “I don’t see signs that the higher gasoline prices are a trend,” analyst Trilby Lundberg, who puts out the Lundberg Survey of gasoline prices, told Bloomberg.

“Retail price changes will probably be small in the near term, [and] it will take big increases in crude to cause gasoline prices to climb even more,” she said.