Subscribe to our free, weekly email newsletter!


Diesel prices resume growth path

By Jeff Berman, Group News Editor
March 29, 2011

One week after a temporary and slight respite from increasing prices, the average price per gallon for diesel fuel is heading up again, according to data from the Department of Energy’s Energy Information Administration (EIA).

After a 0.1 cent decline last week, diesel prices went up 2.5 cents to $3.932 per gallon, with prices up 99.3 cents on an annual basis.

As has been the case in recent weeks, the average price per gallon is at its highest level since reaching $3.958 the week of September 26, 2008. Diesel prices have been at $3 or more per gallon for 25 straight weeks. And prior to the week of October 4, 2010, when diesel prices hit the $3 per gallon mark, the average price per gallon was below $3.00 for 18 straight weeks.

As LM has reported, diesel prices and the price per barrel of oil have been increasing for many reasons, most notably due to political and civil unrest in the Middle East and North Africa, specifically in Libya in recent weeks, has resulted in oil producers in that region suspending or shuttering operations, according to media reports. This has subsequently led to tighter supplies, which is driving up oil and gas prices. And the recent earthquake and Tsunami in Japan also has the potential to lead to further prices hikes, too, say many industry experts.

As of press time, oil barrel prices were at $102.85 on the New York Mercantile Exchange, according to media reports, after topping $106 per barrel last week, due to the situation in Libya.

In terms of how these prices can impact supply chain and logistics operations at a time when freight volumes are showing slow but consistent growth, many shippers have expressed concern about the pace of these diesel increases, explaining that if prices continue to rise at their current pace, it has 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.

And due to the economics driving the increases in global oil prices, shippers really don’t have any choice in the matter, a shipper told LM.

“Shippers will have to pay to get their goods to market even as the price of fuel increases,” said the shipper. “The fuel surcharge (FSC) is not necessarily an evil thing. Shippers need to [partner] with transportation and logistics services companies and realize that without an FSC these companies would not likely be able to stay in business…but shippers need to do their homework to determine what the actual costs are and what percent they should pay to carriers.”

For related stories, please click here.

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

While shippers ready themselves for the long Labor Day weekend, we’d like to remind them that new security and compliance regulations are - as always – looming ahead.

United States Class I carloads were down 56,104 carloads–or 4.6 percent annually–at 1,115,957 in August, and intermodal containers and trailers were up 3.6 percent--or 38,617 units- at 1,114,370.

A new report from Chicago-based freight transportation and logistics consultancy CarrierDirect released this week examines current freight market conditions and what logistics and supply chain stakeholders need to do and know in order to stay one step ahead of the competition.

You’ve heard the old saying, it was the best of times, it was the worst of times. Rob Handfield sees this as the best of times for procurement professionals, who have an opportunity to deliver real value to their organizations

While core metrics were down from a very impressive July, the August edition of the Non-Manufacturing Report on Business from the Institute of Supply Management (ISM) was still very strong.

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