Diesel prices are down for sixth straight week, reports EIA

The Department of Energy’s Energy Information Administration (EIA) reported this week that the average price per gallon of diesel headed down for the sixth straight week.

The current price—at $3.977 per gallon—is down 1.6 cents compared to last week and comes on the heels of 1.3 cent, 4.1 cent, 4.1 cent, and 2.9 cent declines in recent weeks. Over the past six weeks, prices have fallen a cumulative 18.2 cents, with this week’s price marking the lowest level for diesel since $3.927 per gallon the week of January 28. 

Prior to these past six weeks of declining prices, diesel prices rose a cumulative 26.5 cents over a six week span.

On an annual basis, the average price per gallon is down 17.1 cents, compared to recent annual spreads of 17.1 cents, 14.9 cents, 14.1 cents, 9.5 cents, 3.5 cents, and 3.6 cents, respectively.

Earlier this month, the EIA updated its short-term energy outlook. It is now calling for diesel prices to average $3.90 per gallon in 2013 (down from $3.92) and $3.80 in 2014 (down from $3.82), with WTI crude oil now pegged at $91.92 in 2013 (up from $92.81) and the 2014 forecast remaining unchanged at $92.17.

Regardless of the fluctuation in diesel prices, shippers are cognizant of the impact diesel prices can have on their bottom line—for better or worse.

And they continue to be proactive on that front, too, by taking steps to reduce mileage and transit lengths when possible as well as cut down on empty miles.
And even through shippers want to adjust budgets in order to offset the increased costs higher fuel prices bring, it is not always an easy thing to manage.

Shippers have told LM that adjusting budgets is only part of the solution when it comes to dealing—and living—with fuel price fluctuation. 

This was evident in the results of a recent Logistics Management reader study, which polled 420 respondents on their diesel spend.

Nearly 16 percent (15.5) of respondents said that their average fuel surcharge is less than 5 percent above base rates, and 13.8 percent said it was 6-to-10 percent higher. And 14.5 percent said it was 11-to-15 percent higher, with 11.9 percent indicating it was 16-to-20 percent higher. More than 30 percent—33.3 percent—said it was more than 20 percent higher, and 11 percent said they were unsure.

When asked if they expect to pay higher fuel surcharges in the coming months, 39.1 percent of the LM survey respondents said yes, with 44.1 percent saying they did not expect to, and 16.8 percent unsure.

And if fuel prices rise in the coming months, 67 percent said they would raise or adjust their freight budgets to cover higher than budgeted for fuel prices and 33 percent saying they would take no action. 

LM Oil and Fuel Columnist Derik Andreoli wrote in his most recent column that with domestic diesel consumption growing by 13 percent, and domestic diesel production growing at 14.8 percent, it would seem that the diesel market should have loosened some. But diesel prices, he wrote, have doubled from roughly two dollars per gallon in early 2005 to over four dollars per gallon today.

“The problem, of course, is that refiners sell diesel fuel to customers in Europe, South America, Asia, and elsewhere,” explained Andreoli. “Back in 2005, the U.S. imported an average of nearly 8 million gallons of diesel fuel per day, but the U.S. flipped to being a net diesel exporter in September 2007 and net exports have risen steadily since then. In 2012, net diesel exports averaged 37 million gallons per day, and for the first time ever net exports exceeded one million barrels (42 million gallons) per day in June 2012.”

The average price per oil is currently $93.53 on the New York Mercantile Exchange at press time.