By Frederick Kiel, Staff Reporter
This story appears in the March 24 print edition of Transport Topics.
Retail diesel and gasoline prices again set U.S. records last week as the diesel average flirted with $4 a gallon, according to the Department of Energy.
The average cost of diesel at the pump jumped 15.5 cents to a national average of $3.974, the fourth straight week of new records in DOE’s continuing survey of filling stations. Over the past five weeks, the diesel average has skyrocketed by 69.4 cents.
Also last week, the average cost of retail gasoline climbed 5.9 cents to $3.284 a gallon, DOE said.
Spiraling fuel prices strained trucking companies large and small, leading American Trucking Associations to seek relief measures from the federal government.
As diesel soared above $4 a gallon in many regions, domestic supplies were reduced as some U.S. refineries exported diesel to Europe and South America, where prices are even higher, analysts said.
“Some East Coast refineries are even shipping distillates [the part of crude from which diesel is created] to Europe now, because prices are so high there, that even after paying shipping costs, they can make more money that way,” Laurie Falter, analyst at DOE’s Energy Information Administration, told Transport Topics.
Crude oil prices, the main engine pushing retail prices, fluctuated widely after hitting their historic high of $110.33 a barrel on March 13, and then falling to $100 on March 20 in trading on the New York Mercantile Exchange, Bloomberg News reported.
On the East Coast, diesel jumped 16.5 cents to an average of $4.035 a gallon.
In New England, diesel cost $4.119 on average, while the Mid-Atlantic had the highest prices in the nation: an average of $4.177 a gallon.
Diesel averaged $4.018 on the West Coast, DOE said.
Soaring demand and tight supplies have pushed retail diesel up much more quickly than gasoline, analysts said, with foreign use rising rapidly and claiming a share of U.S. diesel production.
Ron Planting, an economist at the American Petroleum Institute, Washington, D.C., told TT that “petroleum use in the United States has been flat for the past four years, with almost all of the growth in petroleum use coming in China and other developing countries.”
“The United States finds it harder to get additional diesel supplies from overseas, especially in Europe, where we used to get diesel cheaply,” Planting said.
“But there is such a strong demand for the fuel for personal vehicles in Europe that diesel costs much more there now, and they don’t have extra to export,” he added.
Mary Welge, senior editor at the Oil Price Information Service, confirmed that American refineries were selling diesel not only to Europe but also to Latin America.
“U.S. refineries definitely have been exporting ultra-low-sulfur diesel, though demand for it from abroad has slackened in recent days,” Welge told TT March 19.
Neither analyst had hard numbers on the amounts of exports, saying such data often were delayed two months or more.
Refineries did not return telephone calls for comment.
Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, said OOIDA has been inundated by “gobs of calls from angry members” over diesel prices.
“It’s certainly not pretty out there,” Spencer said. “It’s gone beyond just going out of business or retrenching. Truckers are losing everything — their houses, savings, medical insurance, tuition for their kids.”
Large carriers also were hit.
Truckload carrier Werner Enterprises Inc., No. 14 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada, said in a March 19 filing to the Securities and Exchange Commission it expected first-quarter earnings to fall “substantially” below the year-ago period.
Air and ground expeditor Panther Expedited Services, Seville, Ohio, No. 98 on the TT for-hire list, said it has weathered the diesel surge in the past weeks by being assertive.
“We’ve been very aggressive in our sales strategy in getting higher prices to cover unexpected fuel jumps,” Jeff St. Pierre, vice president of risk management and driver services, told TT.
“We also have been insistent in negotiating the lowest fuel prices possible and passing 100% of everything we get directly to our partner trucking firms,” St. Pierre said.
Expedited has no trucks of its own, he said, but runs a fleet of 1,600 tractors that cover the lower 48 states, Canada and parts of Mexico. The trucks are owned by firms that have up to 50 trucks, as well as individual owner-operators, St. Pierre said.
March 24, 2008 7:45 AM, EDT
Diesel, Gasoline Hit New Highs
Fuel Jumps 15.5¢ to $3.974, in 5th Straight Rise