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August 8, 2022 5:53 PM, EDT

Diesel Drops Below $5 for First Time Since March

Fuel Falls 14.5¢ to Hit $4.993 a Gallon
Fuel pumps at a filling stationThe West Coast less California and the West Coast were the only regions with price drops that exceeded 17 cents. (Daniel Acker/Bloomberg News)

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The national average price of diesel dropped to less than $5 a gallon for the first time since March, falling 14.5 cents to settle at $4.993, according to Energy Information Administration data released Aug. 8.

The last time diesel cost less than $5 was March 7, after a 74.5-cent surge lifted the cost to $4.849. It rose to $5.25 the following week and peaked at $5.81 on June 20. The price of diesel has now fallen for seven consecutive weeks totaling 81.7 cents. But it still costs $1.629 a gallon more than it did at this time in 2021.



The average price dropped in all 10 regions surveyed by EIA. The largest decline was in the West Coast less California at 17.5 cents to $5.224 a gallon. That was closely followed by the West Coast region at 17.3 cents to $5.630 a gallon. The New England region saw the smallest decrease at 11.2 cents to $5.351 a gallon.

The average price of a gallon of gasoline took a big tumble too but couldn’t quite slip beneath the $4 mark. It fell 15.4 cents per gallon to lodge at $4.038 for the national average. The Midwest saw the biggest drop at 18.5 cents to $3.851 a gallon.

Phil Flynn, an oil analyst with the Price Futures Group of Chicago

Flynn

“I think there’s going to be renewed focus on the tightness of supply going into winter,” Phil Flynn, senior energy analyst at The Price Futures Group, told Transport Topics. “Now we have seen a little respite from those record high prices because oil prices have come down.”

President Joe Biden has ordered the release of millions of barrels from the Strategic Petroleum Reserve. Flynn noted that has helped, along with the possibility Russian oil is getting through despite sanctions. He noted some countries are still accepting Russia oil that once refined may find its way into the United States.

“China and India continue to import Russian oil and they don’t have any problem with it,” Flynn said. “I think some of that oil does get bounced around and probably gets exported out to the U.S. through the back doors after it’s been a refined product.”

Russia has used its immense oil output to put pressure on countries as the international community has slapped it with sanctions for invading Ukraine. Hungary, Czech Republic and Slovakia recently saw their oil imports get blocked. Slovakia did see imports return but the other two countries are still waiting as of Aug. 10. Flynn noted that was a shot across the bow by Russia.

U.S. On-Highway Diesel Fuel Prices

EIA regional fuel chart

EIA.gov

“We put a team together that meets weekly,” Ken Cromwell, chief operating officer at Decker Truck Line, told TT. “We actually just had our call. We basically review every shippers’ fuel surcharge program because they’re numerous across our customer base and we try to make sure that every shipper is at least contributing to the increased cost.”

Decker Truck Line sought rate adjustments when the fuel prices spiked or they had to haul less freight for shippers that weren’t keeping up. The team would make a business decision each week on the new surcharge and where capacity was going to go. That pressure has alleviated some with diesel prices going down in recent weeks.

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“We’ve turned it from an action item to a monitor item,” Cromwell said. “What we’re doing now is making certain that operationally we’re fueling at the right locations, following our fuel solutions, watching deadhead, basically the blocking and tackling that we should be doing every day. So, we’ve gone from alert mode to monitor mode as of this afternoon and we’re going to hopefully continue to see it go down with the expectation that it may rise again in Q3.”

Cromwell added that any time there is an uncontrollable economic headwind that begins to dissipate, that helps alleviate some of the pressure. He noted fuel surcharges have been able to decrease which has helped his shippers. The EIA actually had to delay the fuel cost report when the prices first started coming down.

“That was really frustrating to both the carriers and shippers from my perspective simply because we were just using a dated number that we all knew wasn’t correct,” Cromwell said. “So, we’ve had to make some corrections on revenues and sales adjustments for that reason. I would hope that the fed has figured out a way to not have that problem crop up again.”

Cromwell did note that it was lucky the prices didn’t change too dramatically or continue spiking up during the reporting delay. That would have caused even more problems. Instead, it started steadily decreasing.

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