Diesel Soars 14.6¢ to Record $3.303 a Gallon

By Michael G. Malloy, Staff Reporter

This story appears in the Nov. 12 print edition of Transport Topics. Click here to subscribe today.

The average price of a gallon of diesel in the United States jumped 14.6 cents last week, setting a new record high of $3.303 a gallon, the Energy Department reported. Last week’s diesel price, $3.157 a gallon, matched the old record, set Oct. 24, 2005.

At the same time, oil neared $100 a barrel for the first time in history and the average price of a gallon of gasoline rose 14.1 cents, to $3.013. At least one analyst expressed growing concern over whether there would be adequate diesel to meet truckers’ needs over the winter.

Diesel has now risen 41 cents since Labor Day and is 79.7 cents higher than a year earlier. Last week’s increase was the largest in a single week since a record 34.6-cent increase in October 2005 following a series of hurricanes.

DOE said the gasoline average was now above $3 for the first time since July 16. It is 81.3 cents higher than the corresponding week last year.

At a burn rate of 730 millions gallons of diesel and 280 million gallons of gasoline per week, trucking paid $144 million more for its fuel than it had just a week earlier, based on DOE’s figures.

Crude oil hit a record $98.62 in intraday trading on the New York Mercantile Exchange Nov. 7, a day after setting a closing-price record of $96.70, Bloomberg News reported.

Laurie Falter, an analyst for DOE’s Energy Information Administration, attributed the fuel spikes mainly to oil prices, which are about 60% higher than last year.

“Crude is about $35 [a barrel] higher than a year ago, which works out to about 83 cents a gallon. That’s just about where we are for both gasoline and diesel, and there’s your increase,” she told Transport Topics.

Independent truckers in particular are being hit hard by the steep prices, said one truck-ing executive whose company uses owner-operators exclusively.

“They get 100% of the pass-through from the fuel surcharges, but they’re playing catch-up with these high prices,” said Randy Sorell, chief financial officer of

Lake Shore Pacific, a truckload carrier with operations in California, Arizona and Ne-vada.

“If you ask a guy to move an empty trailer, that’s a big deal now, whereas before you could pay mileage or a flat fee. Now they’re saying, ‘We’re gonna have to talk about how much you’re going to pay me,’ ” Sorell told TT.

An American Trucking Associations economist expressed concern last week that both diesel and crude prices could continue to rise — and that there could be supply short-ages this winter.

“We’re definitely concerned” about supplies, said ATA’s Tavio Headley. “Especially with the colder weather, we may see more of a refinery focus on heating oil.”

Diesel and heating oil are both distillate fuels and compete for stocks in colder months, affecting both price and supply. Worldwide, diesel is currently a commodity in extremely high demand, said Tom Kloza, chief analyst with the Oil Price Information Service.

“Diesel is the hot international fuel product and is the product that shows the greatest global growth,” Kloza said. For example, China has reported widespread diesel short-ages in recent weeks (11-5, p. 30) and as a result, the Chinese government boosted prices by 10%, The Associated Press reported Nov. 6.

DOE last week boosted its projection for diesel for the fourth quarter by 17 cents a gal-lon to $3.15 a gallon, from an earlier forecast of $2.98.

DOE also said the previous week’s crude oil inventories and gasoline stockpiles each fell by 800,000 barrels, while distillate inventories showed a gain of about 100,000 bar-rels.

Distillate inventories are about 8.8% below last year, but still above the five-year aver-age, DOE’s Falter said.

“It’s not as dire a situation as gas was this past summer, but it’s still tight,” she said.

Falter added that tight supplies “could become more of an issue with heating oil,” as those inventories, which are higher in sulfur content than on-road diesel, were about 9.5% below last year’s level.

Heating oil futures have hit records lately, the most recent being on Nov. 7.

With prices rising, Rep. Bob Goodlatte (R-Va.) last week sent a letter to President Bush asking DOE to temporarily suspend oil shipments to the Strategic Petroleum Reserve. The letter, signed by 25 other members of Congress, suggested halting shipments would help bring prices back down.

Rep. Edward Markey (D-Mass.), who is chairman of a key House energy committee, wrote a letter Nov. 2 to the president, asking that oil and heating oil be released from the SPR.

But a DOE official told TT last week there were no plans to halt shipments of any of the 50,000 barrels of oil to the reserve each day.