The U.S. average retail price of diesel climbed 2.9 cents to $3.147 a gallon, and crude oil prices pushed past $65 a barrel to post a six-month high, the Department of Energy reported April 22.
Diesel now costs 1.4 cents more than it did a year ago, when the price was $3.133, DOE said.
Regional diesel prices rose everywhere, with the highest coming in California, where the average price climbed 3.6 cents a gallon to $4.003. That was 18.8 cents higher compared with a year earlier.
U.S. average #diesel fuel price on 4/22/2019 was $3.147/gal, UP 2.9¢/gallon from 4/15/19, UP 1.4¢/gallon from year ago https://t.co/J1dsvtptaA #truckers #shippers #fuelprices pic.twitter.com/p5jmhSScIG— EIA (@EIAgov) April 23, 2019
Also last week, the national average price for regular gasoline climbed 1.3 cents to $2.841 a gallon, DOE’s Energy Information Administration said.
The national average is 4.3 cents more than a year ago, EIA said.
Regional average prices were mixed, falling in three areas and climbing in six.
Diesel margins are forecast to be higher compared with recent years because of the continuing growth in both U.S. and global distillate consumption, EIA reported in a recent outlook of summer fuel prices.
EIA forecast wholesale diesel fuel margins will average 48 cents a gallon this summer, 5 cents a gallon higher compared with last summer’s level — as a result of increasing refining margins — and 8 cents a gallon higher than the previous five-summer average.
At the same time, lower crude oil prices are expected to drive forecast retail diesel prices lower this summer compared with last year. EIA forecasts that diesel fuel retail prices will average $3.09 a gallon this summer, down from an average of $3.22 a gallon last summer but still higher than the five-year average of $2.95 a gallon.
For all of 2018, distillate demand growth was the second highest of any year since 1977. Last year’s growth was driven by a combination of more economic growth, industrial output, international trade activity, and oil and natural gas drilling activity.
All of these factors contributed to more trucking activity. Based on macroeconomic forecasts from IHS Markit and EIA’s crude oil and natural gas production forecast, EIA expects growth in all of those areas again this summer, but at a more moderate pace, contributing to the slower forecast distillate demand growth.
Nikola CEO Trevor Milton presents the Nikola Two on April 16. (Nikola Motor Company/YouTube)
A zero-emissions truck working its way toward the market could help with the uncertainties of fuel costs, said Allan Wainscott, general manager of Thompson Truck Center, a unit of Thompson Machinery.
Nikola Motor Co.’s hydrogen fuel cell Class 8 could be a real asset to a trucking company, he said, “because they are going to have a fixed cost so [fleets] can pre-plan everything. You can almost guarantee your profitability based on where the truck is going to operate [if you can be certain of your costs].”
The emerging truck maker intends to offer a seven-year, 700,000-mile lease that is going to be on a per-mile basis, and includes the necessary hydrogen fuel.
That should avoid the volatility of the fuel surcharges and help with setting freight rates, he said.
“In today’s marketplace, it is very difficult for a trucking company to project where they are going to be next year [with profits and expenses]. There are so many unknowns,” said Wainscott, who has 43 years of trucking industry experience.
Thompson Machinery is poised to become the sales and service provider for Nikola in Mississippi and Tennessee.
The Nikola Two daycab is slated to go into initial production in 2022, after field trials.
Meanwhile, oil climbed as the U.S. government said it will no longer renew waivers for select countries that had been buying Iranian oil that is otherwise under sanctions.
“Our goal has been to get countries to cease importing Iranian oil entirely. Last November, we granted exemptions from our sanctions to seven countries and to Taiwan. We did this to give our allies and partners [time] to wean themselves off of Iranian oil and to assure a well-supplied oil market,” Secretary of State Mike Pompeo said April 22.
But no exemptions will be granted now.
“We’re going to zero, going to zero across the board. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits,” he said.
Pompeo noted the U.S. government’s decision used “the highest possible care” to ensure market stability.
West Texas Intermediate crude futures on the New York Mercantile Exchange closed at $65.70 per barrel April 22, compared with $63.40 on April 15.