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Diesel heads down for first time in three weeks, EIA reports

By Staff
July 08, 2014

Following two weeks of increases during which it saw a cumulative 3.8 cent increase, the Department of Energy’s Energy Information Administration (EIA) reported this week that the average price per gallon of diesel dropped 0.7 cents to $3.913 per gallon.

This decrease follows 3.7 cents and 0.1 cents declines over the previous two weeks and was preceded by a cumulative 9.3 cent decline over seven weeks.

Diesel is up 8.5 cents annually and is up 0.3 cents year-to-date going back to January 6.

In its recently-issued Short Term Energy Outlook, the EIA pegged the average price for diesel prices in 2014 at $3.90 and $3.78 in 2015, with crude oil at $98.67 per barrel in 2014 and $90.92 in 2015.

As LM has reported, with prices continuing to hover around the $4 per gallon mark adjusting budgets is only part of the solution when it comes to dealing—and living—with fuel price fluctuation, according to shippers.

In some cases they look for hedge diesel prices when it is applicable, shippers have told LM. This involves committing to a certain price on fuel at which pay to a certain rate at which point it is frozen at that rate for the shipper. And it also requires shippers to be focused on keeping their drivers on the road as much they can and being profitable and
not in detention.

Other steps being taken by shippers to combat high fuel prices include things like focusing more on utilization and efficiency by doing things like driving empty miles out of transportation networks.

A shipper told LM that if prices going forward were to head up that carriers will do all they can to pass any excess cost back to the shipper, with smaller carriers likely to feel the pain associated with the fuel increase and are demanding more for their services.

“When it becomes time to negotiate rates, carriers will be talking a lot about the cost of fuel and using it as a leverage point for general rate and line haul increases,” the shipper said.  “Shippers must be acutely aware of what percentage of their invoice cost is actual fuel surcharge.”

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Article Topics

News · EIA · Diesel Prices · All topics

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