Price of Diesel Nudges Up as Industry Seems Resolved to Higher Costs

A driver fills his rig with diesel
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The national average retail price of diesel fuel increased by 2.6 cents, pushing the weekly average to $3.252 a gallon, according to the U.S. Energy Department’s weekly report released Sept. 4. Trucking’s main fuel now costs 49.4 cents a gallon more than it did a year ago, when it was $2.758 a gallon.

Average prices increased in every region of the country. The largest hike was in the Midwest, which saw prices jump 3.8 cents, to $3.191 from $3.153. The least expensive diesel fuel can be purchased in the Gulf Coast. Still, the price there rose 3.1 cents, to $3.035 from $3.004.


Eddie Seal — Bloomberg News

The Energy Department’s weekly fuel report usually is released every Monday afternoon, but it was delayed because of the Labor Day weekend.

While diesel prices are increasing, the cost of unleaded regular gasoline dropped nationally, but just slightly, falling three-tenths of a cent to $2.824 a gallon, compared with $2.827 the previous week. Since the middle of August, gasoline prices virtually have remained unchanged, increasing and decreasing week-to-week by just tenths of a cent. The least expensive gasoline is in the Gulf Coast at $2.549, down two cents from the previous week.

After Labor Day, prices for gasoline and diesel usually begin to fall. But oil analysts said fuel prices had been in a holding pattern due to concerns that Tropical Storm Gordon could affect oil refineries in the Gulf of Mexico. The storm dropped several inches of rain after coming ashore near Pascagoula, Miss., on Sept. 4, but fuel facilities were not damaged and production was not impacted.

“On the auspices that even a little bit of production could be lost — with precautionary shutdowns — that fortified diesel,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. “There is an adage I have, and it’s this: ‘Buy on the probability that it comes in and then sell before landfall.’ ”

The National Hurricane Center is now watching Hurricane Florence, which as of Sept. 6 was swirling in the Atlantic Ocean on an uncertain path.

The U.S. Energy Information Administration said the price of a barrel of West Texas Intermediate crude oil was down 79 cents on Sept. 5 at $68.72 compared with a week earlier when it was $69.51, However, the per-barrel price is $20.06 higher than it was this time last year.

“Fuel impacts the bottom line directly. Anything you save there is almost pure profit,” added Jack Legler, technical director of the Technology & Maintenance Council at American Trucking Associations. “In a competitive environment you just can’t pass fuel through. To a certain extent you have to eat those costs to stay competitive, so it’s coming off of your bottom line. You’re never less vigilant about fuel. Any penny saved goes right to the bottom line.”

Mesilla Valley Transportation CEO Royal Jones told Transport Topics that the Las Cruces, N.M.-based company carefully monitors its fuel efficiency, and for reasons that stretch beyond budgeting.

“For every gallon of diesel you don’t burn that’s 22 pounds of carbon not in the air. It’s one reason why we are running 20% biodiesel in some of our trucks,” said Jones. “In El Paso we’re running 20% biodiesel and on the rest of the road, it’s 5%. Biodiesel puts zero carbon into the air. So far as keeping the air clean, we’re really doing it.”

It is not only the trucking industry that is watching the increased cost of fuel closely. DC Trails is a Lorton, Va.-based motorcoach company that has daily scheduled service runs between Washington, D.C., and New York City, as well as sightseeing trips and charter service. With 68 buses, owner William Torres told Transport Topics he is encouraging his drivers to limit their idling. But the improved technology on buses has increased his efficiency from 5 mpg in 2008 to as high as 9.5 mpg now.

“We try to control the idling. Buses that are idling get reported to us,” said Torres. “However, the efficiency of the new vehicles is really making a huge difference in terms of fuel.”

Torres added the strong economy and higher number of passengers is clearly offsetting the higher prices his company is paying for fuel.