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Diesel prices remain down, says EIA

By Jeff Berman, Group News Editor
June 14, 2011

Diesel prices fell for the fifth consecutive week and the sixth time in the last seven weeks, decreasing 0.8 cents to $3.94 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

The price per gallon for diesel has fallen a cumulative 19.2 cents since hitting $4.124 per gallon the week of May 2.

As previously reported in LM, even with the recent decline of diesel prices, 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 with summer driving season officially here.

While the current situation may not be as dire as it was during the summer of 2008, when prices hit nearly $5 per gallon and $150 per barrel, shippers are bracing for prolonged pain at the pump, according to the results of a recent Logistics Management reader survey of roughly 250 logistics, supply chain, and transportation executives.

The survey revealed that 25 percent felt average fuel surcharges were more than 20 percent above base rates and another 19 percent say average fuel surcharges were 11-15 percent above base rates. 18 percent said average fuel surcharges were in the 16-20 percent range above base rates, with 16 percent of respondents at 6-10 percent and 13 percent saying average fuel surcharges were 1-5 percent above base rates. Another 8 percent said they were unsure of how much their average fuel surcharge was above base rates.

The price per barrel of oil is currently trading at $97.30 on the New York Mercantile Exchange, according to media reports. The price has been dropping in recent weeks due to concerns about renewed stalling in the global economy.

What’s more, an OPEC meeting held last week made little progress on increasing oil production despite tight supplies and rising prices, according to a Wall Street Journal report. The report also noted that tension among key cartel players Saudi Arabia and Iran remains intact, calling into question the group’s ability to influence oil prices.

“The fact that member quotas were not raised should not come as a surprise,” said Derik Andreoli, Ph.D.c. is the Senior Analyst at Mercator International, LLC. “OPEC is not a unified body, and it has not been operating as a unified body for quite some time. Without even taking into consideration the complicating factors of the revolutionary wave that has swept across the shores of much of the Middle East North Africa region (and therefore much of OPEC), there seems little reason for Iran, Venezuela, and others to vote to allow Saudi Arabia to lift production. Not only do they have nothing to gain (because they are operating at full production capacity), they have everything to lose if Saudi Arabia lifts production—and exports—significantly because doing so would push down the price of oil. This of course presupposes that Saudi Arabia can elevated production levels can be sustained.”

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).


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