Editorial: Up, Up and Away

The front page of Transport Topics on May 21 told of a three-month high for diesel fuel; this week’s has news of a four-month high. At the same time, gasoline has risen to all-time record highs. Some might detect a pattern here.

Prices are skyrocketing, truckers’ pocketbooks are hurting and everyone — except the oil producers and refiners — is complaining.

Another disturbing pattern seems to be developing, in that every new run-up in prices seems to have a different root cause, according to the “experts.”

In recent weeks, we’ve been told that diesel prices keep climbing not because of a shortage of petroleum, but because refiners are finding it more profitable to produce gasoline, with its record prices and bulging profit margins. Normally, this time of year refiners begin to produce more distillates for diesel to power trucks and home heating fuel to begin rebuilding stockpiles for the next winter. This bodes ill not just for today, but for many seasons to come.

Distillate inventories are racing downward; dwindling stockpiles were blamed for much of last year’s price increases. Year over year, distillate supplies are now at 2.4 million barrels, compared with 12.5 million barrels in February. And distillate production has fallen in three of the past four weeks.

The talk these days is of refining capacity shortcomings, even as oil-producing nations are talking about reducing production because wholesale prices are falling.

Nevertheless, the average price of a gallon of a diesel at the pump is now $1.529, a lot closer to the record high of $1.67 set on Oct. 18, 2000, than the record low of 96.5 cents set on Jan. 4, 1999.

Some analysts are predicting that the high prices will remain at least through the summer. Based on current trends, when summer ends we’re likely to be reading stories about how diesel is skyrocketing because of decreased petroleum production and inadequate stockpiles of distillate.

And why are we not mollified by the words of another analyst who told one of our reporters last week: “These real high prices are unsustainable and, according to traditional models, they should come down. . . . But this has been anything but a traditional year.”

It now costs the average trucker who fills his two 150-gallon tanks just under $460 per visit to the fueling station.

And it appears that things are only going to get worse.

This story appears in the June 4 print edition of Transport Topics. Subscribe today.

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