By late July, average prices for diesel fuel had fallen for eight straight weeks. That's good news for shippers who have been paying fuel surcharges to motor carriers to help offset rising fuel costs.

The Energy Information Agency reported that the average price for diesel nationwide fell to 134.8 cents a gallon on July 23. That's the lowest per-gallon price since January 2000, when prices abruptly began to increase. Fuel prices have dropped in every region of the country, with the greatest decreases seen in the Midwest and on the West Coast.

Although diesel prices are still well above those reported in the spring of 1999, when per-gallon prices fell below $1, they are far lower than they were at their peak last fall, when they reached 165.7 cents a gallon.

Whether prices will continue to fall is uncertain. In late July, the Organization for Petroleum Exporting Countries (OPEC) announced that it would cut daily output by one million barrels a day beginning in September. That represents a cut of approximately 4 percent of daily production by OPEC members. The planned cutback will have some effect on diesel prices, but it's likely to be minor.

In the meantime, in late July, nationwide inventories of distillate, the petroleum product from which diesel is produced, reached 120.6 million barrels after six consecutive weeks of increases. That was 10.5 million barrels above levels reported a year earlier—an important indicator of future prices, especially as the nation moves toward the heating-oil season. (Heating oil and diesel fuel are both distillate products.) Diesel fuel inventory, meanwhile, was 71.4 million barrels, 1.3 million barrels ahead of July 2000's levels.

The EIA reports on diesel prices and distillate stocks each week. For the latest information, visit the Logistics Management & Distribution Report Web site at www.logisticsmgmt.com.