Diesel prices are up for third straight week
July 23, 2013
The average price per gallon of diesel gasoline continues to head north, with the Department of Energy’s Energy Information Administration (EIA) reporting this week that the average price headed up 3.6 cents to $3.903 per gallon.
This represents the third straight week of increases, following last week’s 3.9 cent gain, which, according to EIA data, it is the single highest weekly increase since rising 5.3 cents the week of February 18. The increase two weeks ago, which led the current three-week stretch of price hikes, was 1.1 cents.
And during this three-week run of gains, prices have risen a cumulative 8.6 cents, erasing the 7.3 cent cumulative decline which occurred over the previous three weeks.
On an annual basis, the average price per gallon is up 12 cents.
Prior to the gains of the last three weeks, the previous six straight weeks of declines were preceded by a two-week stretch which saw prices rise a cumulative 4.5 cents.
Prior to the two-week stretch of increases, diesel prices declined for ten straight weeks and dropped a cumulative 31.4 cents. Prior to the previous ten weeks of declining prices, diesel prices rose a cumulative 26.5 cents over a six week span.
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.
UPS Freight President Jack Holmes said at the eyefortransport 3PL Summit that fuel increases need to be taken into account as part of the shipper-carrier relationship.
“A carrier—who is a partner—simply passing expenses on to [a shipper] is not in my opinion a carrier you want to do business with,” said Holmes. “The one you want to do business with is the one who will tell you ‘this is what has happened and here is what we will do to mitigate that expense’ and hopefully you do things on fuel efficiency and idle time that get you closer to negating the impact of those things on your business but those are the differences between a vendor relationship and a partner relationship—which does things to help each other.”
When asked if they expect to pay higher fuel surcharges in the coming months, a recent Logistics Management reader study of roughly 420 shippers found that 39.1 percent said yes they did, 44.1 percent said they did not expect to have to pay higher fuel surcharges, with 16.8 percent stating they were unsure.
A major contributor to the recent spike in gasoline prices is Middle East tension among oil producing countries. At press time, the average price per barrel of crude oil on the New York Mercantile Exchange was $106.91 for a 1.1 percent decline from Monday. A Dow Jones report explained that oil prices also have been supported by tensions in oil-rich regions of South Sudan, Libya and Iraq in recent days, raising concerns that supplies could get disrupted.
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