Subscribe to our free, weekly email newsletter!


Diesel prices fall below $4 per gallon mark

By Jeff Berman, Group News Editor
May 22, 2012

Diesel prices declined for the sixth consecutive week, according to the Department of Energy’s Energy Information Administration (EIA).

The price per gallon for diesel fell 4.8 cents to $3.956 per gallon, falling 0.5 cents short of last week’s 5.3 cent drop, which was the steepest decline in almost five months. The steepest decline in the last six months was a 6.6 cent decrease to $3.828 per gallon during the week of December 19.

Over the last six weeks of diesel declines, prices have dipped a cumulative 19.2 cents during that span. And prior to this most recent decline, the price per gallon had been above the $4 per gallon mark for 12 straight weeks.

On an annual basis, diesel is 4.1 cents less than it was a year ago.

In its recently updated short-term energy outlook, the EIA is calling for diesel prices to average $4.06 per gallon in 2012 and $4.03 in 2013, with oil pegged at $104.12 per barrel in 2012 and $103.75 in 2013.

Oil prices are currently at $92.13 per barrel on the New York Mercantile Exchange. This is down sharply from prices in the $106 range earlier this month. An Associated Press report said the decline is due to concerns about global economic growth and news that that Iran will allow the U.N. nuclear agency to restart a probe into its nuclear program.

Despite the fluctuation of oil prices, LM Oil and Fuel Columnist and Senior Analyst at Mercator International, LLC Derik Andreoli recently wrote that gasoline prices remained insulated from the rising cost of crude for a couple reasons.

“On the supply side, ethanol production increased rapidly over this period of time. Today, roughly one in ten gallons of gasoline consumed in the U.S. is derived from corn-based ethanol, which is a substitute for gasoline but not diesel,” wrote Andreoli. “Moreover, European gasoline demand has been supplanted by diesel, and old, inflexible European refineries were set up to maximize gasoline output. As a consequence, Europe’s surplus gasoline was, and is, exported to the U.S. East Coast. As gasoline supply climbed relative to diesel, U.S. gasoline consumption fell as a consequence of the recession. Only now is it rebounding as the economy limps along the path of recovery. With fuel economy increasing, however, demand is not likely to recover to pre-recession levels.”

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. Steps like this were cited by many shippers at the NASSTRAC Logistics Conference & Expo earlier this month.

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.

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

Earlier today, the United States Senate signed off on a six-year surface transportation authorization, according to various media reports. The bill, entitled the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act, passed by a 65-34 margin and comes at a time, when the most recent extension for surface transportation funding expires tomorrow, July 31.

Demand for the $500 million in available funding for the United States Department of Transportation’s TIGER (Transportation Investment Generating Economic Recovery) competitive grant program was easily trumped, with applications for the seventh round of TIGER grants coming in at $9.8 billion, or nearly twenty times the available amount, DOT said this week.

Global logistics managers will be tracking the progress of the controversial Trans-Pacific Partnership (TPP) talks in Maui, Hawaii this week, as negotiating parties hope to finalize the agreement.

As has been noted in recent coverage on this site in regards to Peak Season, one underlying theme has been, and remains, how Peak Season is not what it used to be. That is not to say there will not be any Peak Season-related activity. Make no mistake, there will be and things driving it from the seasonal nature of business activity and cargo flows to higher demand and increased e-commerce activity, among others.

UPS Access Point locations serve as a replacement delivery address when consumers are not at home to receive a package or when consumers want a delivery to go somewhere other than their residence.

Article Topics

News · EIA · Diesel Prices · Diesel · All topics

Comments

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