By Timothy Cama, Staff Reporter This story appears in the April 22 print edition of Transport Topics.
The U.S. diesel average price declined 3.5 cents last week to $3.942 a gallon, the Department of Energy reported, while the price of crude oil tumbled to its lowest level this year.
Last week marked diesel’s seventh straight decline, for a total of 21.7 cents. The streak started after the fuel peaked at $4.159 on Feb. 25, the highest price in more than four years.
Diesel’s current level is 18.5 cents lower than a year ago, a 4.5% decline, DOE said after its April 15 survey of fueling stations.
Gasoline also dropped for the seventh straight week, falling 6.6 cents to $3.542 a gallon. It was the largest decrease since Dec. 17 and leaves it 38 cents a gallon lower than a year earlier.
Gasoline has declined 24.2 cents since Feb. 25.
Timothy Hess, a fuel analyst at DOE’s Energy Information Administration, attributed the falling pump prices to a drop in crude oil.
“We’re seeing some weakness in the crude market, which is really related to the economy,” Hess said. “It’s really a crude oil story.”
Crude oil for May delivery on the New York Mercantile Exchange closed at $86.68 a barrel on April 16, the lowest close since Dec. 13. It was trading just above $97 a barrel at the start of the month but has declined steadily.
The low crude oil prices are related largely to weak economic news in China and the United States, the largest oil-consuming countries in the world, Hess said.
High fuel supply inventories also are keeping prices low, Hess added.
In its weekly inventory report released April 17, EIA said the United States had 22 billion barrels of ultra-low-sulfur diesel, which is about 4 billion barrels above the average for this time of year.
“U.S. refiners are running very hard. There’s a fair amount of product out there,” Hess said. “So the market is well-supplied.”
Despite the recent diesel declines, truckload carrier Heartland Express Inc. identified fuel as its largest cost in the first quarter.
The company, in its April 16 earnings report, said fuel has been its largest expense in six of the past eight fiscal quarters, including the first three months of this year.
Prior to drastic fuel increases in 2008, salaries, wages and benefits together always had been the largest cost, Heartland said.
The carrier said fuel costs increased 0.6% during the first quarter from a year ago. Heartland said it is focusing on surcharges, reducing idling and efficient fuel purchasing to keep control of costs.
“Fuel expense continues to hinder our operating margins,” said Heartland, which ranks No. 47 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada.
Also last week, truckload fleet Marten Transport Ltd. said its fuel costs rose 3.1% to $40.3 million during the first three months of 2013, compared with a year earlier. However, J.B. Hunt Transport Services Inc. saw its fuel costs decrease 3.3% in the same period, to $116.6 million.
