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May 7, 2007 7:45 AM, EDT

Diesel Declines 4¢ to $2.811

Gasoline Continues to Soar, Jumping 10.2¢
By Eric Miller, Staff Reporter
This story appears in the May 7 print edition of Transport Topics. Click here to subscribe today.
The national average retail price of diesel fuel fell 4 cents a gallon to $2.811 last week, its second straight decline, while the gasoline average posted its largest one-week gain in just over a year, the Department of Energy reported.
Diesel has dropped 6.6 cents in the past two weeks, and the current price is 8.5 cents lower than a year ago. However, commercial trucking’s primary fuel has increased 39.8 cents since the low this year of $2.413 on Jan. 29.
The price last week means the average trucker paid $79.60 more for a 200-gallon purchase than at the end of January.
Trucking burns more than 730 million gallons of diesel fuel and about 280 million gallons of gasoline each week.
Gasoline increased by 10.2 cents a gallon last week, reaching $2.971 a gallon, DOE said following its April 30 survey of fueling stations. It was the largest increase since April 24, 2006. The gasoline average has increased by 80.6 cents a gallon since Jan. 22.
“There’s so much more demand for gasoline than there is for diesel,” said Laurie Falter, an analyst with DOE’s Energy Information Administration.
Gasoline prices have jumped because more refineries than usual were shut down for plant maintenance, she added, and some experienced problems when they attempted to start up again. Normally, more than 90% of refineries are on line, she said, but capacity was down to 88.3% last week.
As a result, gasoline inventories shrank for the 12th consecutive week, falling last week by 0.5% to 193.1 million barrels, DOE said. The 12-week drop was the longest series of consecutive weekly inventory declines at least since 1990, according to DOE, and left gasoline supplies 7.9% below the five-year average.
Distillate inventories, which include diesel, also fell, but only by 0.17% or 198,000 barrels, to 117.1 million barrels, according to DOE.
“It seems we’re a little bit better supplied with diesel than we are with gasoline,” said Phil Flynn, an analyst with Alaron Trading. “But that doesn’t mean that we’re out of the woods yet with diesel.”
Energy Secretary Samuel Bodman said last week the average gasoline pump price in the United States is likely to rise to a record.
When asked by reporters if gasoline could reach the all-time high of $3.067 a gallon, set in September 2005 after Hurricane Katrina, Bodman said, “I fear so.”
To help keep fuel prices down, DOE last week announced it was postponed near-term plans to buy crude oil for the Strategic Petroleum Reserve. DOE had intended to buy more than 9 million barrels of crude oil during the summer.
In reaction to that announcement, crude oil futures in New York on May 3 fell to $62.80 a barrel, the lowest level in six weeks, news services reported.
Truckers, meanwhile, said they remained focused on ways to cut fuel costs.
Bruce Shelton, manager of marketing and traffic for A & B Freight Line Inc., Rockford, Ill., said rising fuel prices caused his company to abandon a long-term relationship with a large fuel supplier.
“We were with [Exxon] Mobil for 30 years,” Shelton said. “We went with a smaller supplier, and we found that we were a lot better off.”
As a result, Shelton said that A & B, a less-than-truckload carrier with 62 trucks, has cut its fuel costs by about 10 cents a gallon.
“We get the lowest rate among our supplier’s three depots,” he said.
Likewise, Wayne Smith Trucking Inc., Morrilton, Ark., abandoned an oral agreement with its fuel supplier of 20 years to cut diesel fuel costs, said Neil Corder, who handles fuel marketing for the company.
“Now, we’re getting daily quotes from three suppliers,” Corder said. “We get a guaranteed price for 24 hours.”
Some days, the full-freight small regional carrier cuts 5 cents a gallon off what it used to pay before it turned to multiple quotes, he said. That nickel can make a large difference, especially on those days that the carrier purchases as much as 21,000 gallons of diesel, he said.
Wayne Smith Trucking also is cutting its fuel costs by not permitting its drivers to take the company trucks home at night.
“That may not sound like much, but it all adds up when you figure it may save 20 to 30 miles per truck,” Corder said.