Subscribe to our free, weekly email newsletter!


Diesel prices up 2.6 cents to $4.124 per gallon

By Jeff Berman, Group News Editor
May 03, 2011

Following only its second weekly decline in the last 22 weeks, the average price per gallon for diesel fuel rose 2.6 cents to $4.124 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A week ago, prices fell 0.7 cents to $4.098 per gallon, and the previous week the average price was up 2.7 cents per gallon. When diesel hit $4.078 per gallon the week of April 11, 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.

On an annual basis, the price per gallon for diesel is up $1.002 per gallon.

For a variety of reasons, including political and civil unrest in the Middle East and North Africa, diesel prices and the price per gallon for both diesel and regular gasoline has been on the rise. And the average price per barrel for oil is currently trading at $113 per barrel on the New York Mercantile Exchange, according to media reports. On Monday, it hit a two-and-a-half year high at $114.83 per barrel

Tom Kloza, chief oil analyst for Oil Price Information Service, recently put the current situation in perspective in a recent blog post, explaining that the U.S. is “on course to spend something close to $45-billion on gasoline in the next 30 days… [representing] an increase of about $12-billion from the same 30 days in 2010.”

At last month’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 by Tommy Hodges, chairman/owner of Goggin Warehousing LLC, and chairman of the American Trucking Associations, at an industry conference earlier this year.

“Fuel is a scarce commodity; we all have to get our arms around that fundamental premise if we are going to move forward in making a difference,” he said. “It is not a throwaway issue where we think there is a never-ending flow, and it is always going to be cheap. Those days are long gone and this brings a whole new threshold of thought of what we do everyday and how we relate to increasing prices and escalating fuel costs.”

Hodges stressed that when it comes to the best way of dealing with increasing fuel costs, it is something that needs full collaboration among shippers, carriers, and other logistics and transportation and logistics service providers to lower their carbon footprints.

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.

Click here for related articles on diesel pricing.

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

The PMI, the ISM’s index to measure growth, increased 1.8 percent to 57.1 in July. This is 1.8 percent higher than the 12-month average of 55.3. The PMI has grown in 18 of the last 20 months, with economic activity in the manufacturing sector expanding for the last 14 months as the overall economy was up for the 62nd consecutive month.

YRC Worldwide, whose regional and long-haul units provide the second-largest LTL capacity in the trucking industry, narrowed its second-quarter loss to $4.9 million on $1.32 billion revenue, compared with $15.1 million loss on $1.24 billion revenue in the year-ago quarter.

With NFL training camps in full swing, it stands to reason that Congress must be replete with football fans, given how it basically has elected to punt on federal transportation funding yet again, with the Senate yesterday signing off on a ten-month bill to keep federal surface transportation funding intact through May 2015 through a nearly $11 billion stopgap measure.

Carload volumes were up 4.3 percent at 306,988, and intermodal volume for the week ending July 26 was up 3.3 percent at 264,809

Article Topics

News · 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