Subscribe to our free, weekly email newsletter!


Diesel prices shoot up 8 cents, says EIA

By Jeff Berman, Group News Editor
October 18, 2011

After five straight weeks of declines, the price per gallon for diesel gasoline spiked 8 cents to $3.801 per gallon, according to the Department of Energy’s Energy Information Administration.

Prior to this increase, prices were down a cumulative 14.7 cents for the preceding five weeks.

The average price per gallon for diesel is now 32.3 cents below 2011 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.

Diesel is currently 72.8 cents higher per gallon than it was a year ago, higher than the 65.8 cent annual gap from a week ago. This is still down from declines in the mid-80s and higher for most of 2011.

In its short-term energy outlook, which was updated earlier today, 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.

The price per barrel is currently trading at $88.06 on the New York Mercantile Exchange. The Associated Press reported that recent increases in price are due in part to September retail sales showing a 1.1 percent gain.

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.

At the Council of Supply Chain Management Professionals Annual Conference in Philadelphia this month, Chick Taylor, Chuck Taylor, founder and principal of Awake! Consulting, an organization that encourages supply chain professionals to play active roles in shaping national energy policy, noted that should oil prices eventually rise to $200 per barrel or more, it could spell significant trouble for shippers’ supply chain operations.

“These 12,000-mile supply chains are not going to survive if that happens,” said Taylor. “[Shippers] need to start thinking about what they are going to be doing, because a lot of stuff they are doing in China and India now will need to move to closer places like Mexico.”

Taylor said such an event could serve as an impetus for how supply chains function and operate. He explained that in a steel shipper cannot move iron ore from Brazil to China to be processed and then shipped to the U.S. at $200 per barrel. When this happened in 2008, he noted that steel production in the Midwest started to come back. 

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

Many companies are turning to Global Trade Management (GTM) as a viable solution to address the complexities associated with international trade. But how do you successfully build a business case for GTM software?

Various media outlets reported this week that UPS will pay $25 million to settle allegations that it filed false claims to the federal government over guarantees it made related to delivery of Next Day air overnight packages.

While the dust continues to settle at West Coast ports after a nine-month labor dispute that saw the two main parties involved–the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union–reach a tentative labor agreement on February 22, the PMA said yesterday that its members voted to ratify a new contract with the ILWU.

The United States House of Representatives yesterday passed legislation, entitled H.R. 2353, the Highway and Transportation Funding Act of 2015, by a 387-35 margin that extends current law and authorizes surface transportation programs through the end of July.

As the supply chains of high-tech shippers continue to mature and innovate, coupled with rapid growth, it is not a huge surprise to see them further leverage current strategies and lay the groundwork for newer ones, when it comes to further expanding their manufacturing supply chain capabilities. That was a key theme in the fifth Annual UPS Change in the (Supply) Chain (CITC) survey that was rolled out today.

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