Diesel prices take a 3.5 cent hike for the week, according to EIA data
December 07, 2010
Diesel prices were up for the first time in three week, rising 3.5 cents to $3.197 per gallon for the week of December 6, according to data from the Department of Energy’s Energy Information Administration (EIA).
This increase comes on the heels of a 0.9 cent drop to $3.171 per gallon for the week of November 22 and a 1.3 cent fall from $3.184 per gallon for the week of November 15, which was the highest level diesel prices hit in two years prior to this week’s price, which, according to EIA data, is the highest since the week of October 27, 2008, which checked in at $3.288 per gallon.
Diesel prices have been at $3 per gallon or more for 11 consecutive weeks. Prior to the week of October 4, when diesel prices hit $3.00 per gallon, the price per gallon of diesel was below the $3.00 mark for 18 straight weeks. But the recent rise in prices is in line with gains in the price per barrel of crude oil, which has been hovering in the mid $80s, on average, during the same period.
As of press time oil barrel prices were at $90.37 a barrel in electronic trading on the New York Mercantile Exchange, according to a Bloomberg report. The report added that the increase is tied to a decline in excess inventories in recent weeks, which is likely to continue.
The EIA is calling for 2010 crude oil prices to hit $78.80 per barrel and 2011 prices at $85.17 per barrel, according to its short-term energy outlook. Both figures are above previous estimates of $77.97 per barrel for 2010 and $83.00 per barrel for 2011.
As oil prices ride the wave of fluctuating prices, a recent Logistics Management reader survey of about 150 logistics, supply chain, and transportation managers found interesting disparities regarding how much shippers’ average fuel surcharges were above their base rates.
And even though oil and prices are still relatively in check despite recent increases, the fact remains that the current rate of diesel consumption is not foreseeable in the future, according to Chuck Taylor, founder and principal of Awake! Consulting, an organization that encourages supply chain professionals to play active roles in shaping national energy policy.
Speaking at the Council of Supply Chain Management Professionals Annual Conference in San Diego earlier this year, Taylor said that for the first time in its history the United States will be forced to increase economic growth while decreasing oil consumption, which, he said, is something that has never happened before.
“This is something that has serious implications for the prosperity of global supply chains,” said Taylor. “There are many who say that cannot be done…and that we are in for a permanent decline, but I don’t agree with that.”
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!