Subscribe to our free, weekly email newsletter!

Diesel prices are up nearly 5 cents

By Jeff Berman, Group News Editor
November 09, 2010

Following two straight weeks at $3.067 per gallon for diesel gasoline, the price per gallon rose 4.9 cents to $3.116 per gallon for the week of November 8.

This marks the sixth straight week of the average price per gallon at $3 or more and is the highest it has been since the week of May 10, when it hit $3.127. Prior to the week of October 4, when diesel prices hit $3.00 per gallon, the price per gallon of diesel was below the $3.00 mark for 18 straight weeks. But the recent rise in prices is in line with gains in the price per barrel of crude oil, which has been slightly more than $80, on average, during the same period, although it has been rising in recent weeks.

Oil prices are $86.78 per barrel, according to media reports as of press time, which represents a high level for the year to date. An Associated Press report stated that oil prices have seen recent gains due to a weak dollar after the United States Federal Reserve decided to inject an additional 600 billion dollars into the market to stimulate the world’s biggest economy. The report added that The International Energy Agency (IEA) forecast that crude prices would grow to 113 dollars a barrel by 2035, despite environmental policies, essentially dooming climate-change goals, and more than one-third of the new demand would come from China’s appetite for energy.

The current average price per gallon of diesel is 31.5 cents higher than it was a year ago.
The EIA is calling for 2010 crude oil prices to hit $77.97 per barrel and 2011 prices at $83.00 per barrel, according to its short-term energy outlook. Both figures are below recent estimates of $79.13 for 2010 and $83.50 for 2011.

As LM has reported, if prices continue to rise at current levels, some industry experts contend that barrel prices will be between $80 and $90 in 2011 and the price per gallon of diesel will stay above $3 per gallon.

While diesel prices are manageable for now, shippers need to continually monitor and adjust transportation spend levels for any situations which could result in an unexpected uptick in prices.

This was the case when diesel hit $4.75 per gallon in 2008. What’s more, with limited insight into where prices are heading shippers and carriers need to be cognizant about being more efficient overall in freight transportation operations and taking measured steps to burn less fuel.

A shipper responding to a recent Logistics Management reader survey on fuel costs said in order to be efficient and profitable while dealing with fluctuating fuel prices and fuel surcharges is to hedge any variability with a Fuel Price Index based on the EIA national average.

“This will give some assurance that any small increases are absorbed by the carrier with major increases being shared by the shipper and carrier,” said the shipper. “Using such a vehicle will ensure that carriers will not pull the cost of fuel back on the shipper and in even worse case scenarios use fuel increases to add to their operating margins.”

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).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in October at 135.7 (2000=100) was up 1.9 percent compared to September’s 133.1, and the ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment was 139.8 in October, which was 0.9 percent ahead of September.

The average price per gallon of diesel gasoline fell 3.7 cents to $2.445 per gallon, according to data issued today by the Department of Energy’s Energy Information Administration (EIA). This marks the lowest weekly price for diesel since June 1, 2009, when it was at $2.352 per gallon.

In its report, entitled “Grey is the new Black,” JLL takes a close look at supply chain-related trends that can influence retailers’ approaches to Black Friday.

This year, it's all about the digital supply network. In this virtual conference, we will define the challenges currently facing supply chain organizations and offer solutions designed to transform linear operations into dynamic, automated networks that offer seamless communication, visibility, and the ability to respond and optimize processes at any given time.

In his opening comments assessing the economy at last week’s RailTrends conference hosted by Progressive Railroading magazine and independent railroad analyst Tony Hatch, FTR Senior analyst Larry Gross said the economy continues to slog ahead at a relatively tepid pace, coupled with some volatility in terms of overall GDP growth. And amid that slogging, Gross said there is currently an economic hand-off occurring between the industrial sector and the consumer sector.


Post a comment
Commenting is not available in this channel entry.

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA