By Timothy Cama, Staff Reporter This story appears in the Aug. 27 print edition of Transport Topics.
The U.S. retail diesel average price rose 6.1 cents to $4.026 a gallon last week, the first time it has risen above $4 since May, the Department of Energy reported last week.
The increase was the seventh straight, for a total of 37.8 cents, DOE’s Energy Information Administration said after its Aug. 20 survey of fueling stations. Before the current streak, diesel prices had fallen for 12 consecutive weeks.
Diesel initially topped $4 a gallon this year on Feb. 27. It rose as high as $4.148 on April 9, and remained above $4 until May 14.
The retail gasoline average also rose for the seventh week, gaining 2.3 cents to $3.744 a gallon, the highest since May 14. Gasoline has gained 38.8 cents since July 2.
The most recent increases leave diesel 21.6 cents higher than a year ago, a 5.7% increase. Gasoline is 16.3 cents higher than the corresponding week in 2011, a 4.6% gain.
American Trucking Associations President Bill Graves told a television audience that rising fuel costs hurt not only the trucking industry, but the entire U.S. economy.
“It all gets passed through to consumers, and so at a time when consumers are already struggling financially, all of the sudden everything they buy on the store shelves is inching up a few pennies as well,” Graves told Lori Rothman in an Aug. 17 appearance on the show Fox Business.
Commercial trucking uses about 50 billion gallons of fuel a year. Based on a $4-a-gallon retail price for diesel, the industry will spend as much as $200 billion this year, Graves said.
Despite the high pump prices, Graves also told Rothman, the trucking industry supports raising the federal fuel tax to pay for infrastructure — especially as an alternative to additional highway tolls.
“The diesel fuel tax is a fairly nominal amount to collect, but tolling is a substantial amount to collect,” he said. “So we still believe, in effect, the lesser of the evils for infrastructure investment is the federal fuel tax.”
Trucking spent $142.7 billion on fuel last year, ATA estimates, and Graves predicted that the 2012 figure will be noticeably higher.
The price of crude oil is largely to blame for the recent increases, said Timothy Hess, a fuel analyst with EIA.
“Crude oil has been seeing some upward pressure on issues in the Middle East, concerns over supply in regards to Iran, as well as some supply issues in the North Sea,” Hess told Transport Topics.
Crude’s price rose steadily last week, closing at $96.27 on the New York Mercantile Exchange on Aug. 23.
The Middle East issues in question include a sanction on Iran that has blocked oil exports since July. Iran has threatened since last year to block the Strait of Hormuz, through which about a fifth of the world’s oil travels on ships.
In addition, Chevron Corp.’s fuel refinery in Richmond, Calif., has not fully recovered from a fire in early August, so the West Coast is still bringing in diesel from other regions — or other countries, Hess said.
That was reflected in EIA’s survey, which found that the West Coast’s diesel price increased 10.2 cents a gallon to $4.254 last week, while the Rocky Mountains saw a 10.4-cent gain to $4.062.
With fuel prices soaring again, President Obama is considering a release of oil from the nation’s Strategic Petroleum Reserve.
It is “an option that is on the table” to increase supplies and lower prices, Obama aide Josh Earnest told Bloomberg News on Aug. 17.
He said no decision has been made and declined to provide further details.
