Subscribe to our free, weekly email newsletter!


Diesel prices slip but remain over the $4 per gallon mark

This slight decline follows a 2.7 cent gain to $4.105 per gallon last week
By Jeff Berman, Group News Editor
April 26, 2011

Diesel prices remained above the $4 per gallon mark for the third straight week despite dropping $0.7 cents to $4.098 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

This slight decline follows a 2.7 cent gain to $4.105 per gallon last week. Diesel prices have been up 19 of the last 21 weeks. And on an annual basis, the price per gallon for diesel is up $93.6 per gallon.

When diesel hit $4.078 per gallon two weeks ago, it marked the first time diesel has been above the $4 per gallon mark since the week of September 15, 2008, when it hit $4.023.

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.

The price per barrel for oil is currently $111.78, according to a Bloomberg report, which is the second straight day prices have fallen. The report stated that U.S. Treasury Secretary Timothy Geithner said this week that oil prices have become an obstacle to improvement in the economy, and it also mentioned that Khalid al-Falih, chief executive officer of Saudi Arabian Oil Co., said the world’s biggest oil exporter is concerned about the impact of prices on economic growth.

At last week’s NASSTRAC Logistics Conference and Expo in Orlando, Fla., shippers and carriers both expressed ongoing concern about the price of diesel and oil. While many said prices at current levels are still digestible, they cautioned that could quickly change depending on how quickly prices rise with summer driving season approaching.

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.

This was made clear in a recent Logistics Management reader survey of roughly 250 shippers. The survey found that if fuel prices continue their ascent, 70 percent—or nearly 180—of the shippers surveyed indicated they would need to adjust their freight budget to cover higher than budgeted fuel prices.

Nearly 40 percent of shippers said they would adjust their fuel budgets by 6-to-10 percent and 15 percent of shippers said they planned to adjust budgets by 11-to-15 percent.

For related articles, 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

As was the case for the second quarter, third quarter earnings results for publicly-traded less-than-truckload (LTL) carriers are again strong. Signs of solid earnings results from carriers that have posted earnings to date include tonnage increases, gains in weight per shipment and average daily shipments, higher yield, and revenue per hundredweight.

While the holiday season is known to bring good tidings and cheer to all, it may also come with another thing that is not so pleasant: higher rate freights. That was the thesis of a commentary written by Mark Montague, industry pricing analyst and chief market-watcher for DAT, a Portland, Ore.-based subsidiary of TransCore.

Earlier this week, FedEx said it is expanding its International First service for early deliveries with the addition of 31 new origin countries, which will bring the total number of origin markets for the service to 97.

Monday, December 22 is pegged as UPS's peak delivery day, as the company expects to deliver more than 34 million packages that day, adding that it expects to see six days in December top last year’s peak shipment day delivery record of 31 million packages.

The time has come again for less-than-truckload (LTL) general rate increases (GRI), with various carriers recently announced their respective rate hikes in recent days.

Article Topics

News · Trucking · Transportation · EIA · Diesel Prices · All topics

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