August 27, 2007 7:45 AM, EDT

Diesel and Gasoline Prices Rise

Oil Falls as Storm Worries Ebb

By Andrea Fischer, Staff Reporter
This story appears in the Aug. 27 print edition of Transport Topics.
The national average prices of retail diesel and gasoline rose last week, even as crude oil futures fell to an eight-week low after Hurricane Dean passed without any significant disruption to U.S. oil production.
The diesel average rose 2.1 cents to $2.868 a gallon, the Department of Energy said after its Aug. 20 survey of fueling stations. The increase followed a 5.1-cent decline the prior week.
Trucking’s primary fuel is now 16.5 cents lower than at the corresponding week of 2006, but 45.5 cents above the lowest level of the year, recorded on Jan 29.
John Felmy, chief economist for the American Petroleum Institute, told Transport Topics that the increase last week was due mostly to earlier gains in crude prices in anticipation of the hurricane.
“Crude oil prices were up because the market was unsure of [whether or not] the hurricane would hit U.S. Gulf of Mexico oil fields and refineries,” Felmy said.
The hurricane did strike the Yucatan Peninsula in Mexico on Aug. 21, and Felmy said 2.6 million barrels of oil per day of that nation’s normal production was expected to remain offline until Aug 24. However, U.S. Gulf Coast oil production was not affected.
Felmy added it was too soon to tell what effect Mexico’s production interruption would have on the U.S. oil supply.
DOE also said the U.S. average price of gasoline rose 1.4 cents to $2.785 a gallon, the first increase in five weeks. Gasoline has fallen 43.3 cents since May 21, when it hit a record high of $3.218. The average is 13.9 cents lower than the corresponding week a year earlier.
The trucking industry burns an estimated 730 million gallons of diesel, which means the industry paid about $332 million more for diesel last week than it did at the end of January.
Doug Coen, president of Rochester Cartage, a Rochester, Minn., truckload carrier, told TT the company is trying to increase fuel efficiency by decreasing idle time.
Rochester does not have auxiliary power units on any of its five trucks, said Coen, “but we’re working to address any unnecessary idling.”
Reducing idle time “has gotten a lot more crucial” as fuel prices have gone up, said Coen. “We’re preaching to our drivers that they should shut off their trucks at every opportunity, even if they are only making a five-minute stop.”
Shaving spending on fuel bills and improving truck efficiency were also topics at the Aug. 16 meeting of the National Accounting & Finance Council of American Trucking Associations.
During a briefing on fuel-efficiency technologies, an engineer said that trailers can be made more aerodynamic, not just tractors.
“Seventy-five percent of the drag created by driving comes from the trailer and 25% from the tractor,” said Richard Wood, president of Solutions and Technologies, Virginia Beach, Va. He said the three “hot spots” that exacerbate trailer drag are the undercarriage, the gap between the trailer and the tractor, and the back of the trailer.
Though most of his suggestions consisted of lightweight additions to the trailer to resculpt its shape, he said that with flatbeds, merely reorganizing the placement of the loads can offer dividends. As a rule of thumb for dry vans, he said, if a company can spend $300 a trailer for attachments and save 1% on fuel, that would be a worthwhile investment.
Meanwhile, crude oil prices on the New York Mercantile Exchange fell to $69.80 a barrel on Aug. 22, an eight-week low and 4.8% below year-ago levels, Bloomberg News reported. Crude had stayed above $70 a barrel since June 29.
Crude oil prices were above $73 a barrel in the days before Dean’s arrival.
Besides the hurricane, a DOE report showing that crude oil imports rose 9.5% to 10.8 million barrels a day for the week ended Aug. 17, the highest level since the week ended May 18, helped pushed prices down last week.
Separately, DOE said distillate inventories rose 1.3 million barrels to 129 million barrels, while gasoline inventories fell 5.71 million to 196.2 million — the biggest one-week decline since August 2003.
Associate News Editor Jonathan S. Reiskin contributed to this story from Broomfield, Colo.

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