Diesel prices rise for the first time in 3 months

Editor’s note: A July 10 article on the Logistics Management Web site, entitled “Diesel prices dip for the first time in 3 months,” was inaccurate. The headline has been changed to “Diesel prices rise for the first time in 3 months.” LM apologizes for the error.

After seeing weekly declines for three months straight, diesel prices headed in the opposite direction this week, rising $3.5 cents to $3.683 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This first weekly increase since a 0.6 cent gain the week of April 9 comes on the heels of 3 cents, 5.1 cents, and 5.2 cents, respectively, in recent weeks. And prior to this week’s increase, diesel prices had fallen a cumulative 50 cents over the previous 12 weeks, according to EIA data. This week’s price is 21.6 cents below the average price per gallon at this time last year.

In its recently updated short-term energy outlook, the EIA is calling for diesel prices to average $3.90 per gallon in 2012 and $3.87 in 2013 (down from previous estimates of $4.06 and $4.03, respectively), with oil expected to hit $96.80 in 2012 and $97.00 in 2013 (down from previous estimates of $104.12 and $103.75, respectively).

Oil is currently trading at $85.99 on the New York Mercantile Exchange. The Associated Press reported that this down 2 percent as striking oil workers in Norway—whose oil fields produce more than 3.8 billions of oil and natural gas per day—“forced the industry to prepare for a historic shutdown in the North Sea.”

Even with recent declines, shippers continue to keep a watchful eye on fuel prices and are taking steps to reduce mileage and cut down on empty miles. This was made clear at last month’s eyefortransport 3PL Summit in Chicago. Many shippers told LM that they are constantly monitoring fuel prices, as they relate to freight rates and the overall costs of doing business.

And as previously reported by LM, shippers continue to take steps to minimize the impact of fluctuating fuel costs. Over the years, they have maintained that this is imperative as higher diesel prices have 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.

But even with this week’s increase, shippers have gotten some pricing relief with the cost per gallon of diesel at relatively low levels still, especially when compared to a year ago.