Diesel prices head up for the fourth straight week, reports EIA

Diesel prices continued their recent stretch of gains with a 3.6 cent increase this week to $2.936 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This marks the fourth straight weekly increase and the largest one over that period, with the gains over the previous three weeks at 3.5 cents, 3 cents, and 0.4 cents, respectively.

The current diesel price is at its highest level since the week of January 12, when it was at $3.053 per gallon.

And this four-week stretch of increases, during which time prices have risen a cumulative 10.5 cents, marks the longest stretch of weekly increases, going back to the five-week period ending February 24, 2014, when prices headed up a cumulative 14.4 cents.

On an annual basis, the EIA said that prices are down $1.08 cents. And in its recently-issued Short Term Energy Outlook, the EIA pegged the average price for diesel prices in 2015 at $2.83 and $3.24 in 2016, with WTI crude oil at $55.02 per barrel in 2015 and $71.00 in 2016.

As of press time, the average price per barrel on the New York Mercantile Exchange was $49.59.

Even though oil prices remain very low, having dropped by roughly 50 percent over the last six months, gasoline prices are seeing increases in recent weeks for various reasons.

Patrick DeHaan, senior petroleum analyst at GasBuddy, wrote in a blog posting that the spring spike has hit pumps across the nation.

“New records were broken last week in California as prices spiked at their fastest pace ever, even faster than when Chevron’s sprawling Richmond, CA refinery caught fire,” he wrote. “Meanwhile every single state- all 50 of them- saw a price increase in the last week, with a common theme behind the increases: refinery this, refinery that.”

He added that in the last two weeks, a rash of refinery problems has driven up wholesale prices, including an explosion at a California refinery, unexpected cold-related shut downs along the East Coast and Great Lakes, and maintenance that’s beginning at other refineries across the country, and a transition to cleaner, more costly blends of gasoline and declining gasoline inventories.

A recent Logistics Management reader survey found that nearly 75 percent of the roughly 100 surveyed respondents said they do not expect a material increase in the form of higher fuel surcharges in the coming months, with the difference split between those whom said they felt fuel surcharges would increase or that they were unsure.

But, conversely, another 55.4 percent indicated that they planned to raise or adjust their freight budgets to cover higher than budgeted fuel prices should fuel prices continue to head up going forward.

As for how much freight budgets would need to head up, the results varied with: 51 percent saying between 1-5 percent; 32.7 percent saying between 6-10 percent; 6.1 percent saying 11-15 percent; 4.1 percent saying 16-20 percent; 2 percent saying between 21-50 percent, and 4.1 percent saying 100 percent.

While diesel prices are have inched up in recent weeks, things remain in a relatively good spot over all, according to USA Truck President and CEO John Simone.

“There is not really a down side to lower fuel prices,” Simone said. “But when fuel climbs rapidly, the fuel surcharge adjusts on a weekly basis with most customers so when it is declining steadily, the fuel surcharge will typically catch up the next week.  When it is declining rapidly, we do get some short-term benefit of the fuel price going down at the pump but the fuel surcharge has not adjusted yet. But on the opposite side, when we get fuel spikes, which I am sure we will again, it does not adjust fast enough. So while things feel really good right now, if and when fuel prices begin to climb, then we will feel it…before we recover a fuel surcharge.”