Diesel prices head up again for third straight week

Diesel prices continued heading up this week, with a 6.7 cent hike to $3.892 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This comes on the heels of 2.4 and 8 cents gains from the past two weeks, respectively, with prices up a cumulative 17.1 cents in that period. Prior to these increases, prices were down a cumulative 14.7 cents for the preceding five weeks.

The current price per gallon is 23.2 cents less than the high of $4.124 per gallon the week of May 2, which marks the highest level for diesel prices since August 2008, when prices were approaching $5 per gallon. The price per gallon for diesel fuel has not exceeded the $4 mark since the week of May 16, when it hit $4.061.

The price per gallon for diesel is now 82.5 cents above its level from a year ago and is slightly down from declines in the mid-80s and higher for most of 2011 prior to recent weeks.

In its short-term energy outlook, the EIA is calling for diesel prices to average $3.80 per gallon in 2011 (down from $3.80) and $3.73 in 2012 (down from $3.87), with oil pegged at $92.36 per barrel in 2011 and $88 in 2012.

Oil barrel prices are currently trading at $93 on the New York Mercantile Exchange.

With oil prices remaining in the $80-to-$90 per barrel range, prices are 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 various reports.

While diesel prices have been below the $4 per gallon mark, shippers and carriers have told LM the still relatively high prices remain a concern. While many have indicated that prices at current levels are still digestible, they cautioned that could quickly change depending on how quickly prices rise.

“Looking forward, the U.S. economy is clearly not out of the weeds, a fact that makes it difficult for supply chain managers to keep their eyes on the road, wrote Derik Andreoli, Ph.D.c. Senior Analyst at Mercator International, LLC, and LM columnist, wrote in a recent edition of LM. “We know there’s a turn up ahead, but it’s still difficult to see whether the road is going to take us to recovery and even higher fuel prices, or stagnation/recession with high fuel prices.”