Diesel prices are down for the fourth time in six weeks
October 30, 2012
Diesel prices trended down for the fourth time in the last six weeks, dropping 8.6 cents to $4.030 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).
This follows a 3.4 cent fall from the week of October 22 and a 5.6 cent gain during the week of October 15 to $4.15 per gallon, which is the highest price since the week of August 18, 2008, when prices were $4.207 per gallon.
In its recently updated short-term energy outlook, the EIA is calling for diesel prices to average $3.96 per gallon in 2012 and $3.73 in 2013, with WTI crude oil expected to hit $95.66 per barrel in 2012 and $92.63 in 2013.
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.
With fuel prices, for the most part seeing steady gains, the focus from a supply chain management perspective, according to shippers, is more on utilization and efficiency by doing things like driving empty miles out of transportation networks.
A retail shipper recently told LM that his company absorbs the volatility in fuel prices though its fuel surcharge plan rather than hedging or being active with futures contracts due to the fact that it is not free or easy. And while it does reduce volatility, he said it does not always save money for shippers.
“The way we try to mitigate fuel prices is by how we set up our overall network, which is a highly optimized network of distribution centers and stores and fulfillment centers…which allows us to maximize our destiny,” he said.
Oil barrel prices on the New York Mercantile Exchange were at $86.04 at press time. The Associated Press reported that the price of oil recovered slowly even with Hurricane Sandy making a significant impact on the East Coast and reducing demand for fuel by keeping drivers off roads, closing businesses and silencing activity in New York City and other metropolitan areas.
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