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Diesel prices are up for third straight week, says Energy Information Administration

By Jeff Berman, Group News Editor
July 26, 2011

Diesel prices increased for the third consecutive week and the fourth time in the last 12 weeks,according to data from the Department of Energy’s Energy Information Administration (EIA).

The average price per gallon for diesel increased 2.6 cents to $3.949 per gallon, following 2.4 and 4.9 cents, respectively, over the last three weeks for a cumulative 9.9 cent increase. The 4.9 cent gain from earlier this month marked the single largest weekly gain since the week of April 4, when prices went up 4.4 cents to $3.976 per gallon.

Prior to these recent increases diesel prices had fallen a cumulative 27.4 cents since hitting a 2011 high of $4.124 per gallon the week of May 2. And this week’s price per gallon is cumulatively 17.5 cents less since the week of May 2.

Compared to a year ago, diesel prices are up $1.03.

Oil prices are currently trading at $99.91 on the New York Mercantile Exchange.  A Reuters report stated that prices will remain or exceed the $100 a barrel mark, “on the dollar’s weakness as political wrangling over the U.S. debt ceiling and budget continues.”

Given the fluctuation—and still high prices—of diesel, 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.

And even with declines in prices in recent weeks, the focus from a supply chain perspective for managing fuel price ebbs and flows—for shippers—is more on utilization and efficiency by doing things like driving empty miles out of transportation networks.

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, explaining that if prices continue to rise at their current pace, it has 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.

This was made clear by Tommy Hodges, chairman/owner of Goggin Warehousing LLC, and chairman of the American Trucking Associations, at an industry conference earlier this year.

“Fuel is a scarce commodity; we all have to get our arms around that fundamental premise if we are going to move forward in making a difference,” he said. “It is not a throwaway issue where we think there is a never-ending flow, and it is always going to be cheap. Those days are long gone and this brings a whole new threshold of thought of what we do everyday and how we relate to increasing prices and escalating fuel costs.”

Hodges stressed that when it comes to the best way of dealing with increasing fuel costs, it is something that needs full collaboration among shippers, carriers, and other logistics and transportation and logistics service providers to lower their carbon footprints.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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