Diesel prices head up for second straight week

Diesel prices this week increased 2.4 cents per gallon to $3.825, according to the Department of Energy’s Energy Information Administration (EIA).

This increase follows an 8 cent bump from the previous week, which snapped a streak of five straight weeks of declining prices. Prior to that increase, prices were down a cumulative 14.7 cents for the preceding five weeks.

The current price per gallon now stands 29.9 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 75.8 cents above its level from a year ago and is down 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 $92.83 on the New York Mercantile Exchange. The Associated Press reported that oil has jumped 21 percent in three weeks amid growing investor optimism that European leaders will devise a plan to limit the damage from a possible default of Greek sovereign debt, with details of the plan expected to be announced tomorrow.

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.”