Diesel Rises for 6th Week

This story appears in the June 22 print edition of Transport Topics.

The average price paid for retail diesel jumped another 7.4 cents last week to $2.572 a gallon, marking the sixth straight week of increases in the price of trucking’s main fuel for a total rise of 38.7 cents, the Department of Energy reported.

Gasoline prices also rose by 4.8 cents, to $2.672 a gallon. Over the past 10 weeks, the average has risen 63.5 cents a gallon, DOE said June 15 after its weekly survey of fueling stations.

“The reason why both fuels jumped is because they’re still reflecting the increase of crude oil prices, which continue to gradually rise and which takes a few weeks to work itself down to the retail level,” Douglas MacIntyre, analyst for DOE’s Energy Information Administration, told Transport Topics.

Crude oil prices on the New York Mercantile Exchange have more than doubled since Feb. 12, when oil closed at $33.98 a barrel. The price rose quickly to $72.68 June 11 and has backed off a bit since then. Oil closed at $71.03 on June 17.

“The market is looking ahead in both crude and retail fuel and is seeing a good chance for an economic recovery later this year, which will lead to demand going up,” MacIntyre said. “The reason that diesel has seen higher increases in recent weeks is that people figure that, rather than buying diesel at higher prices later, they’re buying it now.”

Gasoline nearly hit $3 a gallon in California, spiking 8.8 cents to $2.979 a gallon. Retail diesel, like gasoline, also was the highest in California at $2.734. California’s spread between the two fuel prices also was the widest in any of DOE’s regional areas, at 24.5 cents a gallon.

For the first time since the na-tional average price of gasoline passed diesel on May 11, diesel inched ahead in some areas — to $2.543 in the Gulf Coast compared with $2.532 for gasoline, and $2.651 in New England, versus $2.647 for gasoline.

John Felmy, chief economist at the American Petroleum Institute, said a slower decline in demand for diesel also may have accounted for its price gain on gasoline.

“In April, diesel demand was down 10% year-over-year, which was an abysmal drop, but in May, the final figures show that demand was down 6.1% from last year,” Felmy told Transport Topics. “That’s still a decrease but less of a one, and to some people, it looks like some sort of turnabout may be going on.”

Fleets that have strict surcharges said the increase had little effect, while firms without surcharges looked for other ways to economize.

“We have mostly dedicated customers with set, negotiated contracts of varying lengths without any fuel surcharges built into them, so that this recent increase has had a direct effect on our company’s profits,” said John Pesaturo, fleet operations manager of M&M Transport Services, Quincy, Mass.

M&M runs 210 tractors, mainly in the Northeast and Midwest, he said.

“The only ways that we’ve been able to react to the price increases was first, to send a notice out to all drivers to remind them that diesel is going up and to make sure they don’t idle unnecessarily, and then, to maintain the trucks very carefully on a strict schedule, always replacing the air filters and frequent oil changes.”

Pesaturo said that M&M put in governors set at 65 miles per hour during the 2008 diesel price surge, which increased the fleet’s average fuel efficiency to 6.3 to 6.5 miles per gallon from 5.7 to 5.8 mpg.

“We’re also trying out super single tires now and they’re getting about 6.4 mpg,” Pesaturo said. “We did learn recently that we can’t use any biodiesel blends made with chicken fat or whatever” on the fleet’s new trucks. “They run smoothly only on 100% ultra-low-sulfur diesel,” he said.

Susan Wood Weir, secretary and treasurer of Jimmy T. Wood Inc., Memphis, Tenn., said that she updates her company’s fuel surcharges every Monday from the Department of Energy’s Web site.

The company runs 44 tractors and 110 trailers of all types, mainly in the Southeast.

“We had been reducing our fuel surcharges every week over the past few months, but yes, we have started to raise them now. But we have a one-week lag in collecting the extra charge,” Weir told TT.

American Trucking Associations estimates that the U.S. trucking industry burns 752 million gallons of diesel weekly and 285 million gallons of gasoline.

At those rates, truckers paid $291 million more for diesel last week and $169 million more for gasoline than they did the week of May 4, when diesel was at its latest low.

Diesel still was $2.12 a gallon less expensive than mid-June of last year, and gasoline was $1.41 cheaper.