Diesel prices drop 0.7 cents, reports EIA
December 04, 2012
One week after the average price per gallon of diesel gasoline rose 5.8 cents to $4.034 per gallon, the Department of Energy’s Energy Information Administration (EIA) reported this week that the price fell 0.7 cents to $4.027 per gallon.
Last week’s jump represented the highest weekly increase since a 6.3 cent jump from the week of August 27 and the biggest in three months. Compared to a year ago, the average price per gallon is up 9.6 cents, said the EIA.
Prices over the last two weeks are again over the $4 per gallon mark, following a two-week stretch in which they were slightly below $4 per gallon. For the previous five weeks prior to that, prices cumulatively dropped 17.4 cents going back to the week of October 15, which hit $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.
As previously reported, 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.
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.
Shippers have told LM that adjusting budgets is only part of the solution when it comes to dealing—and living—with fuel price fluctuation, according to shippers.
“Right now we are looking at hedging diesel ourselves to see if it makes sense for us,” said a Midwest-based grain shipper. “This will involve us committing to a certain price on fuel at which pay to a certain rate at which point it is frozen at that rate for us. We are also focused on keeping our drivers on the road as much as we can and being profitable and not in detention, and we are also putting in more carrier pools and improving lead times to our plants from 45 minutes to the 20 minute range and get drivers in and out of our plants as quickly as we can.”
Stifel Nicolaus analyst John Larkin wrote in a research note that so far in the fourth quarter, fuel prices have declined 1.5 percent since the beginning of the quarter.
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