Diesel Jumps 2.9¢ to $4.123; Gasoline Rises 3.6¢ to $3.829
This story appears in the March 19 print edition of Transport Topics.
Diesel prices continued to climb, as the national average price rose by 2.9 cents to $4.123 a gallon last week, according to the Department of Energy.
The increase was the seventh straight and the ninth in 10 weeks.
The average price of gasoline climbed 3.6 cents a gallon to $3.829. It was also the seventh straight increase for gas and the 11th in the past 12 weeks, DOE’s Energy Information Administration March 12 said after its weekly survey of fueling stations.
Trucking’s main fuel is now 21.5 cents a gallon higher than it was at this time in 2011, and the average is now at its highest level since May 2.
Analysts said prices could soon go even higher as global demand for diesel continues to rise.
“You’re going to see some really scary numbers in April,” predicted Tom Kloza, chief oil analyst with the Oil Price Information Service. “The trucking companies will complain, then they’ll get the surcharges, but we all know how that movie ended in 2008.”
In 2008, diesel soared to a record $4.764 a gallon in mid-July before the global economic crisis combined with a dramatic drop in fuel consumption to cause the price to plummet to $2.017 in mid-March 2009.
Heavy demand for diesel in China, South America, India and Russia will keep prices high, with the United States a large supplier of diesel and other distillate fuels to the world, a second analyst said.
“The U.S. is exporting 1.1 million barrels a day of distillate,” said Kyle Cooper, principal in Houston energy consultancy IAF Advisors. “If someone is willing to pay more, why not let suppliers ship to them?”
EIA reported that U.S. exports of distillates remained unchanged at 1.12 billion barrels a day from Feb. 17 through March 3, the last day figures were available. “Exports will continue to be very brisk,” Kloza said.
Distillate inventories, which include diesel and heating oil, dropped 4.68 million barrels to 134.8 million, DOE said March 14. Stockpiles had been estimated to fall by 1.5 million barrels.
Meanwhile, some motor carriers are feeling the pinch of high prices, and say they’re nearly helpless to do anything about it.
“We surcharge, but there’s not a lot else you can do except pass it along,” said Robert McDannald, fuel manager at Upstate Trucking Inc., a 13-tractor, less-than-truckload carrier in Fountain Inn, S.C.
Price increases led bulk liquid hauler Roeder Cartage Co., Lima, Ohio, to upgrade its tractor fleet.
Over the past six months, Roeder has purchased 12 new tractors, dispatcher Chris Titus told Transport Topics. “They save us a couple of gallons a mile. We’re thinking about getting rid of the rest of our heavy trucks and replacing them,” he said.
Roeder operates 200 tractors and has 500 tank trailers, Titus said.
Kloza noted that the price for diesel varies in different regions because there’s almost a $50 a barrel differential in the price of crude based on geography. In the Midwest, refineries can purchase crude for $75 a barrel, but the same oil may be selling for $125 a barrel on both coasts.
Crude oil futures closed at $105.11 a barrel on the New York Mercantile Exchange on March 15, a modest decline from the previous week.
Some fleet managers admit to being bedeviled by the latest price spikes. “It’s mildly beginning to get out of control,” said Julie Keeler, account manager at W.R. Drinkwalter & Sons Trucking, Billings, Mont. The carrier hauls road oil, the chemical mixture that road-maintenance crews spray before applying asphalt.
When Drinkwalter resumes that work in May, Keeler said that if diesel prices are hovering around $4.75 a gallon, her company will do what it did in 2008.
“We will not accept any contracts that do not include a surcharge,” she said. “If it gets up past those numbers, you can bet we will be renegotiating.”
