Diesel prices fall again, down 6.2 cents per gallon

By Jeff Berman · August 16, 2011

Diesel prices fell for the third straight week, decreasing 6.2 cents to $3.835 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This follows declines of 4 cents and 1.2 cents from the previous two weeks. Prior to the last three weeks of downward prices, diesel saw a cumulative 9.9 cent gain over a three week period. Current prices are 28.9 cents below the 2011 high of $4.124 per gallon the week of May 2.

The price per gallon for diesel fuel has not exceeded the $4 mark since the week of May 16, when it hit $4.061.

On an annual basis, diesel prices are up 85.6 cents. In its short-term energy outlook, the EIA is calling for diesel prices to average $3.86 per gallon in 2011 and $3.95 in 2012, with oil pegged at $98.43 per barrel in 2011 and $102.50 in 2012.

Oil barrel prices are currently trading at around $87 per barrel on the New York Mercantile Exchange, with the current trading range of between $80 and $90 per barrel is still well above last year’s average of $79.64 per barrel, which means gasoline pump prices should remain higher than last year’s levels, according to an Associated Press report.

As LM has reported, 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.

And with this fluctuation, 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.

Chuck Taylor a noted oil and diesel expert, who runs a Texas-based consulting firm called Awake!, told LM not that the third and fourth quarters will see a return to $4 or higher gallons.

There are several reasons for this, explained Taylor.

“The slight-of-hand release of 60 million barrels (about 17 hours of world consumption) from Strategic Reserves (30 from ours) has already played out,” he said. “The Energy Information Agency’s July 2011 forecast shows a total world consumption of oil of 89.0 million barrels a day for Q3 2011 and 88.8 million barrels a day for Q4 2011. World supplies are about 87 million barrels per day. The estimate of spare capacity is 2-3 million barrels a day all in Saudi Arabia, Kuwait or the UAE (mostly in SA).”


About the Author

Jeff Berman
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. Contact Jeff Berman

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