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

BNSF said that its 2015 capital expenditures will be allocated towards various areas of its business, including maintenance and expansion of the railroad to meet the expected demand for freight rail service, with 2015 representing the third straight year BNSF has invested a record annual capital expenditures investment.

While the ongoing labor negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) ostensibly going from bad to worse, following the ILWU’s announcement late last week that it was halting negotiations from November 20 through November 30, a Congressional group last week penned a letter to PMA and ILWU leadership expressing concern over the state of the negotiations.

The ongoing themes of tight capacity and carrier pricing power are still in full effect, much to the dismay of shippers, based on the most recent edition of the Shippers Condition Index (SCI) from freight transportation forecasting firm FTR.

Information abounds about the growing trend of electric lift trucks and the advantages and disadvantages of the electric solution. Amid all of the information from so many sources, what's the truth about electric lift trucks? This complimentary white paper breaks through the clutter to review why electric lift trucks are gaining in popularity and also to review their challenges, as well as their economic and environmental benefits.

Three weeks after initiating a coordinated series of slowdowns that have mired the major West Coast ports of Tacoma, Seattle, Oakland, Los Angeles and Long Beach, the ILWU has pushed away from the bargaining table.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA