Diesel Dips 0.4¢ to $2.899

This story appears in the July 26 print edition of Transport Topics.

U.S. retail diesel prices dipped 0.4 cent last week to $2.899 a gallon, the ninth decrease in the national fuel average during the past 10 weeks, the Department of Energy reported.

The retail gasoline average, meanwhile, rose 0.4 cent to $2.722 a gallon, the third increase in those same 10 weeks, DOE reported after its July 19 survey of filling stations.

Diesel has now fallen 22.8 cents a gallon over the past 10 weeks, DOE figures show. Despite the most recent increase, gasoline is down 18.3 cents a gallon over that same period.

“Diesel prices have been moving sideways for the past few weeks,” Tancred Lidderdale, senior economist at DOE’s Energy Information Administration, told Transport Topics.

“The latest crude closing prices on July 19 are almost identical with the price on June 15,” Lidderdale said. “There’s really no short-term trend in diesel prices these days, because crude oil prices haven’t made any significant moves recently.”

Crude oil rose to close at $79.30 a barrel on July 22 on the New York Mercantile Exchange. On June 15, crude was $2.68 a barrel lower and the diesel average was $2.928.

However, one fleet owner said he doesn’t pay attention to week-by-week fluctuations in diesel prices.

“Year-over-year changes are much more important than what diesel was selling for a week or two ago,” Jim Harris, owner of truckload carrier Harris Trucking Co., based in Madison Heights, Va., told TT. “At a wholesale price, it’s an average of 34 cents a gallon more expensive now than last year. That’s 6.5 cents a mile . . . and surcharges typically bring in just 60% of costs above fuel’s baseline.”

DOE said the national diesel average is 40.3 cents a gallon more expensive than a year earlier, while gasoline is 25.9 cents more expensive.

Harris, who runs 150 tractors and 600 trailers, said buying diesel at wholesale or rack prices saved the company about 30 cents a gallon. He said his trucks get about 67% of their fuel from company terminals, but that still didn’t make up for the surcharge shortfall.

“I can’t believe it when I read about truckers who say surcharges take care of high prices. No one pays for idling, deadhead miles, or out-of-route miles,” Harris said.

He added that even if fleets got a return load, they “usually lose about 6% to 7% in deadhead to pick up that load.”

Steve Lursen, special projects director at Decker Truck Line Inc., Fort Dodge, Iowa, has been managing the company’s fuel purchasing programs for the past seven years.

“One thing what we do stress is terminal fuel,” Lursen told TT, adding that the fleet got 45% of its fuel from its own terminals.

“We may pick up five loads of fuel when the time is right, and that’s saving us 3 or 4 cents a gallon than if we bought fuel wholesale only when we needed it,” he explained.

Lursen said that the strategy includes making sure trucks “have fuel when they’re leaving the terminal, and hoping they come in empty.”

He said that Decker, which operates more than 500 tractors and 1,300 trailers, also seeks to cut fuel costs when buying it on the road.

“We do run an optimizer program with fuel cards and trip plan for the drivers, telling them where to stop and which fuel stops to use,” Lursen said.

He said that the system saves three to four cents a gallon over regular retail diesel prices.

“We do counsel drivers who go outside the network,” Lursen added. “It’s generally a pleasant conversation and they often have a valid reason for why they did it. We give two informal verbal warnings, and the third will be in the office in a more formal situation.”

Lursen said that Decker also worked with its sole truck manufacturer, Peterbilt Motors Co., to “assist us in introducing various configurations that will result in the best mile-per-gallon outcome.”

“That has produced about two-tenths of a mile increase in fuel efficiency, which adds up to a lot of savings for us,” Lursen said.