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Diesel prices up 4.4 cents to $3.976 per gallon

By Jeff Berman, Group News Editor
April 05, 2011

Diesel prices shot up 4.4 cents to $3.976 per gallon, according to data from the Department of Energy’s Energy Information Administration (EIA).

This increase follows a 2.5 percent gain and a 0.1 percent decline, respectively, over the last two weeks, with diesel prices showing gains in 17 of the last 18 weeks. On an annual basis, diesel is up 96.1 cents.

The most recent tally marks diesel’s highest price per gallon point since reaching $3.958 the week of September 26, 2008. Diesel prices have been at $3 or more per gallon for 26 straight weeks. And prior to the week of October 4, 2010, when diesel prices hit the $3 per gallon mark, the average price per gallon was below $3.00 for 18 straight weeks.

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.

As of press time, oil barrel prices were at $108.47 on the New York Mercantile Exchange, according to media reports, after $106 per barrel in recent weeks, due to the situation in Libya.

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.

Looking forward, an oil industry expert told LM it is unlikely that diesel prices will abate at anytime soon.

There are a number of factors underpinning the continued rise in pump prices. There is, of course, the intensification of the Libyan crisis, and the relative shortage of light sweet Libyan crude,” said Derik Andreoli, Ph.D.c., Senior Analyst at Mercator International, LLC. “But more than that, demand is strong in the U.S. and even stronger in China. Even more importantly, Japan, which until a few weeks ago was Asia’s second largest diesel exporter, has become an importer. As I mentioned in the March 21 Oil and Fuel blog, the response and recovery effort will be energy intensive. Heavy machinery is now being deployed, and the short term solution to Japan’s energy problem is diesel generators.”

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About the Author

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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).

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