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 ·

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, 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. Contact Jeff Berman

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!

Article Topics

Diesel Prices · EIA · Transportation · Trucking · All Topics
Latest Whitepaper
Making the Case for an Integrated Fleet Management Solution
Fleet management technology can drive positive supply chain and business results. Explore this special edition of Making the Case where we lay out the benefits of integrated fleet management technology in your organization.
Download Today!
From the October 2017 Logistics Management Magazine Issue
A leading distributor of professional salon products in the U.S. forms unique partnerships with its key LTLs to lower transport costs, reduce its carbon footprint and improve service to its 565 store locations.
Q4 2017 Rail/Intermodal Roundtable: Improvements apparent; work remains
LM Viewpoint: Collaboration, Now more than ever
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
The State of the Rail/Intermodal Markets
In this webinar our panel will discuss the new service challenges facing rail/intermodal providers and offer practical advice for how shippers can keep efficiency high and costs down.
Register Today!
EDITORS' PICKS
SalonCentric: One Beautiful Network
A leading distributor of professional salon products in the U.S. forms unique partnerships with its...
2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...

26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...