Diesel prices are up for first time in last six weeks, says EIA

Following a cumulative 11.3 cent decline over the last two weeks, diesel prices were up this week, rising 1.4 cents to $3.94 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This increase represents the first time prices rose in five weeks. Prices have dipped 18.4 cents collectively since hitting $4.124 per gallon the week of May 2.

As previously reported in LM, even with the recent decline of diesel prices, shippers and carriers remain concerned about the price of diesel and oil. While many have indicated that prices at current levels are still digestible, they cautioned that could quickly change depending on how quickly prices rise with summer driving season officially here.

In terms of how these prices can impact supply chain and logistics operations at a time when freight volumes are showing slow but consistent growth, many shippers have expressed concern about the pace of these diesel increases should they resume weekly increases, explaining that higher diesel prices have the potential to hinder growth and increase operating costs, which will, in turn, force them to raise rates and offset the increased prices to consumers.

And while the current situation may not be as dire as it was during the summer of 2008, when prices hit nearly $5 per gallon and $150 per barrel, shippers are bracing for prolonged pain at the pump, according to the results of a recent Logistics Management reader survey of roughly 250 logistics, supply chain, and transportation executives.

The survey revealed that 25 percent felt average fuel surcharges were more than 20 percent above base rates and another 19 percent say average fuel surcharges were 11-15 percent above base rates. 18 percent said average fuel surcharges were in the 16-20 percent range above base rates, with 16 percent of respondents at 6-10 percent and 13 percent saying average fuel surcharges were 1-5 percent above base rates. Another 8 percent said they were unsure of how much their average fuel surcharge was above base rates.

And while diesel is down, the price per barrel of oil is currently trading at $98.37 on the New York Mercantile Exchange, according to media reports. This is its lowest level since May 23, “as recent lackluster economic data reignited jitters about global energy appetites,” stated a MarketWatch report.