Diesel Rises 2¢ to $2.849

Increase Is Fuel’s Third Gain in Four Weeks
By Andrea Fischer, Staff Reporter
This story appears in the July 16 print edition of Transport Topics.
The national average price of retail diesel and gasoline both increased last week, the Department of Energy reported, at the same time it was projecting the fuels will continue to climb for the remainder of the summer.
The diesel average rose 2 cents to $2.849 a gallon, the  third increase in four weeks, moving it to the highest level since April 23, DOE said after its latest weekly survey of  filling stations.
The price of trucking’s main fuel is now 6.9 cents below the corresponding week of last year, but it is 43.6 cents higher than the year’s low price of $2.413, set on Jan. 29.
Trucking burns an estimated 730 million gallons of diesel a week, which means the industry paid about $318 million more for diesel last week than at the end of January.
The increase was the result of high oil prices and growing domestic demand, said John Felmy, chief economist for the American Petroleum Institute.
“Diesel and gasoline are both going up, primarily because crude oil prices have been going up,” said Felmy.
Felmy said retail price fluctuations for both fuels typically follow crude oil prices, but the severity of an increase usually depends on how much demand exists in the retail marketplace.
“If there is stronger demand from consumers, refiners can pass along the full cost of crude oil price increases to their customers, and that’s what’s happening now,” said Felmy.
DOE also said the gasoline average price rose 2.2 cents to $2.981 a gallon. Last week’s report marked the first price increase since gasoline reached a record $3.218 on May 21. It had fallen 25.9 cents over six weeks before last week, leaving it 0.8 cent higher than the corresponding week a year earlier.
Trucking burns an estimated 290 million gallons of gasoline each week.
Doug Coen, president of Rochester Cartage, a Rochester, Minn., truckload carrier, said his company is meeting with shippers to discuss potential fuel price increases later this summer.
Coen’s company changes its fuel surcharge weekly, based on DOE’s prices.
“One of our biggest helps in dealing with high prices is to look ahead to the coming months with our shippers, so they know what to expect [in fuel surcharges], instead of reacting to fuel price increases by trying to recoup the cost of diesel,” which may or may not be fully paid by a shipper after an increase, said Coen. “We’ve already talked with our shippers about this summer, and they expect price increases.”
He said his company also monitors the fuel efficiency of its drivers and compares that efficiency to the average miles per gallon run by Rochester’s fleet of 24 trucks.
“We talk to the drivers with the best fuel mileage and the worst, so we can monitor what works best and what wastes money,” said Coen. “There can be a three-quarters of a mile difference per gallon in fuel efficiency, just based on how a driver drives.”
Coen said his company saves about 5% in fuel cost by training drivers to maintain a speed of 65 miles per hour while driving and to shut a truck down every time it is stopped, to reduce idling time.
Meanwhile, Ty Cross, vice president of maintenance for Ryder System, said, “We do everything possible in terms of maintenance to help offset” diesel price increases for customers who lease their trucks.
“We focus on tire maintenance, especially trailer tires,” said Cross, adding that “52% of any gain in fuel efficiency” on average comes from tire maintenance.
“We take a preventive approach to tires, so we check them more frequently than scheduled maintenance intervals,” Cross said.
DOE said in its monthly short-term energy outlook that it expects that diesel’s average price will rise to peaks of $2.901 a gallon in August and $2.904 in September.
For gasoline, “The resolution of many refinery problems that occurred earlier in the season and higher levels of product imports helped bring prices down,” but the fuel will increase to an average of $3.07 a gallon in August before dropping to $2.99 in September, DOE said.
Meanwhile, on July 10, the price of crude oil futures on the New York Mercantile Exchange touched $73.08 a barrel, its highest point since Aug. 25, Bloomberg News reported.
Crude oil prices climbed nearly $7 per barrel in a month, from about $66 on June 11.
Despite that increase, OPEC Secretary General Abdalla el-Badri told Bloomberg that the oil cartel, which supplies more than 40% of the world’s oil, will not increase production because the world market has an adequate supply at current levels.
Oil prices have increased because of unrest in the Middle East and Nigeria and because of a shortage of oil refining capacity, rather than a lack of crude supply, el-Badri said.

 

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