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April 7, 2008 7:45 AM, EDT

Diesel Dips 2.5¢ to $3.964

First Decline in 2 Months; Gas at Record
By Dan Leone, Staff Reporter
This story appears in the April 7 print edition of Transport Topics.

The national average retail diesel price dipped 2.5 cents a gallon last week after six straight increases, the Department of Energy reported, even as gasoline rose 3.1 cents to set a new record high.
Diesel’s decline to $3.964 a gallon was the first drop in two months, and ended a string of five straight records, DOE said after its March 31 survey of fueling stations. The fuel is still $1.174 higher than it was a year ago, piling on more than $857 million in additional weekly costs for the trucking industry.
“A fuel surcharge is not enough,” said Sam Burrer, vice president of operations for refrigerated carrier Dutch Maid Logistics Inc. in Willard, Ohio. “Every one of us out here needs a rate increase in the worst kind of way, but it’s hard to get. There’s no fat left in this business.”
Burrer said that Dutch Maid, which runs about 100 trucks, is able to recover about 70% of its fuel expenses through a surcharge. “You take 100 trucks and you’re not recouping 30% of your fuel costs, and that’s a huge number. I don’t even want to look at it, some days.”
The cost of fueling a tractor-trailer one time has increased by $869 over the past decade, according to data from American Trucking Associations, as stricter federal emission rules have pushed the development of cleaner, but more expensive, engines and fuel.
Truckers in at least six states parked their rigs to protest high diesel costs on April 1, while others took to highways at low speeds in protest and to raise more awareness of the issue (see story, p. 5).
Meanwhile, gasoline’s rise brought the national average retail price to $3.29 a gallon. Gasoline prices have risen 58.3 cents year-over-year, raising the trucking industry’s weekly gas bill by about $169 million.
In the first quarter of 2008, the price of diesel increased by 58.8 cents a gallon, while the price of gasoline rose 18.1 cents.
ATA estimates that trucking consumes about 730 million gallons of diesel and about 290 million gallons of gas each week.
In response to what it has termed a “fuel crisis,” ATA last week announced it would host a seminar on June 19 in Arlington, Va., to discuss fuel conservation, purchasing strategies and techniques for measuring fuel economy with its member carriers.
“We are organizing this workshop to discuss practical solutions that our members can implement to help them address this fuel crisis,” said Richard Moskowitz, an ATA vice president and regulatory affairs counsel.
DOE figures showed the diesel average was above $4 a gallon in its East Coast and West Coast regions, and in the subregions of New England, the Central Atlantic and California.
Other areas also continued to struggle with diesel prices in excess of $4 a gallon.
The president of a truckload carrier that operates around Chicago said local diesel prices were far higher than the national average last week.
“Our prices today are anywhere from $4.31 to $4.51,” Robert
Cunningham, president of Midwest Cargo Systems, said on April 1. “I’d love to be able to buy fuel for somewhere around $4 a gallon,” he said.
Midwest Cargo runs 27 trucks and handles mostly truckload and intermodal freight, Cunningham said.
He told TT that Midwest Cargo calculates its fuel surcharge, about 30% of its base rates, based on the higher local diesel prices in the Chicago area, rather than DOE’s national price.
Although some shippers have remarked that the surcharge is high, “most customers are pretty good about it,” he said.
DOE also said production of distillate fuels, which includes diesel, remained flat at about 3.9 million barrels a day last week.
However, distillate inventories fell by 1.6 million barrels to 109.7 million barrels, and gasoline stockpiles posted their biggest decline since August, falling 4.5 million barrels.
Oil inventories rose 7.3 million barrels, marking the 11th gain in 12 weeks, but oil prices on the New York Mercantile Exchange were near $105 a barrel late last week.