Diesel Average Declines 4.8¢ to $3.956; First Time Below $4 Since February

The national average price for a gallon of retail diesel dipped below $4 last week for the first time since Feb. 20, after pump prices countrywide declined 4.8 cents, according to the Department of Energy.

It was the sixth consecutive decline and left the average price at $3.956. Diesel now has fallen 19.2 cents a gallon since hitting a high for the year of $4.148 on April 9. A year ago, the price was at $3.997, DOE said after its May 21 survey of fueling stations.

DOE also said retail gasoline prices declined 4 cents a gallon to $3.714 last week, the seventh straight drop.

Gasoline reached its highest level of the year on April 2 at $3.941 a gallon. Last year at this time, the average price per gallon was $3.849.

The falling pump prices are the result of crude oil markets that have been roiled by bad economic news from Europe, good news from diplomats defusing Iran’s nuclear threats and growing oil stockpiles, analysts said.

“It can’t happen fast enough for the truckers . . . but what we’re seeing here is the impact of oil falling,” said Phil Flynn, an analyst at PFGBest. “Eight weeks ago we were at $108 a barrel.”

Last week, crude fell below $90 a barrel for the first time since October. The following day, May 24, crude closed on the New York Mercantile Exchange at $90.66, which is 17% below the Feb. 24 price of $109.77, the highest of the year.

Lower prices were welcomed by Travis Rutz, who buys fuel for LS Transport Inc., a private fleet headquartered in Prineville, Ore.

“The invoice I just got today, it came down almost 20 cents [a gallon] . . . than the last invoice a week ago,” said Rutz, assistant manager at LS, which hauls for its parent company Les Schwab Tires, which has 425 outlets in seven states.

“There’s really nothing we can do to save fuel other than the obvious,” said Rutz. “We watch our idle time. We limited the speed on our tractors [to 60 mph] a couple years ago.”

The carrier also put idle timers on its engines.

“If they idle for more than five minutes, they shut off,” Rutz said. “When we started . . . our idle time was at 22%, and we’ve got it down under 10%.”

Due to the nature of the fleet, Rutz said, he can’t test aerodynamic accessories such as the fairings and mud flaps that help other carriers save fuel.

“We’ve got 100 tractors and 800 trailers, and we never have the same trailer combinations together and our guys are constantly dropping trailers, swapping trailers,” Rutz said.

Constantly escalating diesel prices are permanently damaging the trucking industry by depressing shipping rates, said Troy Hutchens, part owner and operations manager at F.V. Martin Trucking and Martin Transportation, sister carriers in White City, Ore., whose 70 trucks haul timber and wood products.

“It took us a couple of years, but we finally got the customers to understand that the price of fuel was ridiculous so most . . . are willing to pay . . . surcharges,” said Hutchens, who serves on the Oregon Trucking Association board of directors.

“In March, fuel was 39% of our cost,” he said. Sometimes the figure reaches 44%, while 20 years ago it was 14%, he added.

Meanwhile, PFG Best’s Flynn said conflict in the Middle East had been the primary force behind this year’s high crude and diesel prices.

“The market panicked about having to replace the supply from Iran, and, guess what, we’ve done it,” he said.

The OPEC oil cartel is producing at its highest level since 2008, Saudi Arabia is approaching 30-year highs, and Iraqi production is hitting its highest levels since Saddam Hussein was toppled, Flynn said.

However, the U.S. stockpiles of distillate — that portion of the oil barrel from which diesel and heating oil are refined — were lower than usual, which contributed to high diesel prices, said DOE economist Neil Gamson.

“I can’t say the [supplies] are tight, but they’re not ample,” Gamson said.

According to the DOE, distillate supplies were at 119.5 million barrels as of May 18 — 15.3% lower than last year and 21.7% lower than two years ago.

Refineries’ problems and increasing diesel exports lowered stockpiles, Gamson said.

As diesel prices escalated and the production of natural gas increased, DOE has begun publishing average pump prices for that fuel, although the surveys are only done quarterly.

For the first quarter, the department reported that the compressed natural gas price was $2.32 for a diesel gallon equivalent. DOE said the survey was conducted between March 30 and April 13.