US Diesel Average Dips 1.4¢ to $3.934
This story appears in the May 26 print edition of Transport Topics.
Diesel’s national average price declined for a third consecutive week, dipping 1.4 cents to $3.934 a gallon, the Department of Energy reported May 19.
Even after a ninth drop in the past 12 weeks, trucking’s main fuel still is 4.4 cents higher than the same week last year, DOE said after its weekly survey of filling stations.
Gasoline also fell for a third straight week, slipping 0.3 cent to $3.665 a gallon heading into Memorial Day, traditionally one of the year’s busiest travel weekends and the start of the summer driving season.
The dip left gas 0.8 cent below its level of a year ago, but it is 47.1 cents higher than its two-year low of $3.194 in mid-November.
Gas rose by 42.1 cents in 12 straight gains before sliding back 4.8 cents in the past three weeks, according to DOE’s Energy Information Administration.
Retail diesel hit a two-year high of $4.021 in mid-March. The weekly average has declined since then, but not significantly, hanging over $3.90 a gallon since then.
Diesel’s slow price decline in the past few months correlates with stronger distillate fuel inventories, which have gained since the end of winter, an analyst said last week.
“In the past few weeks, both distillate and gasoline refiners have been running full-bore, so inventories are starting to build again,” EIA analyst Sean Hill said.
“Distillates have been building for a while — typically this is the time of year we see this happening, following spring refinery maintenance and heading into the summer driving season,” Hill told Transport Topics.
Distillate inventories rose by 3.4 million barrels for the week ended May 16, DOE said last week. That was in contrast to analysts’ forecast of a half-million-barrel decline, Bloomberg News reported.
A fleet executive said last week that his company takes a variety of measures to save on fuel costs.
“One of the main things we do is to try to lower our idling,” said Jay Smith, president of Cox Transportation Services, a large, nationwide truckload carrier based in Ashland, Virginia.
“We do all the normal things that everybody does” to save fuel, including “spec’ing our trucks with aerodynamic trailer skirts and adding low-rolling-resistance tires,” he said.
“There are so many factors involved with routes [such as] weather, and we always try to improve [routing] as much as we possibly can,” he said, adding that the carrier is a member of the SmartWay partnership organized by the Environmental Protection Agency.
EIA’s Hill said Energy’s most recent forecast of lower diesel prices — to $3.87 later this year and $3.78 in 2015 — assumes lower oil prices. The agency predicts they will fall as U.S. crude production continues to climb.
He said that while “generally crude prices have been fairly stable for the last few months, gasoline prices have been increasing with higher demand and switch to summer formulations.”
Gasoline supplies rose by almost 1 million barrels in the second week of May, while crude oil inventories dropped by 7.2 million barrels, DOE said May 21 in its weekly report.
Current market conditions for oil have been at odds with the EIA forecast, as crude closed at $102.61 a barrel May 19 on the New York Mercantile Exchange, a four-week high, Bloomberg reported.
International concerns, including political unrest in Ukraine and Libya, have helped buoy the price of Brent crude oil in London, which U.S. prices have followed, Hill said.
DOE said in its report that U.S. crude imports fell to a 17-year low as domestic production rose, bolstered by rising shale-oil volume, Bloomberg reported.
Imports declined by 660,000 barrels a day to 6.47 million — the lowest level since January 1997 — while U.S. output rose 6,000 barrels a day to 8.43 million, the most since October 1986, DOE’s report said.
Oil rose to more than $104 a barrel after the report of lower crude inventories, and oil finished May 22 Nymex trading at $103.74 a barrel, Bloomberg reported.
