EIA reports diesel prices are down 0.7 cents to $3.911 per gallon

By LM Staff · January 8, 2013

The average price per gallon of diesel gasoline fell 0.7 cents this week to $3.911 per gallon, according to the Department of Energy’s Energy Information Administration.

This marks the sixth straight weekly decline and the 11th time in the past 12 weeks the average price has fallen. And it follows a 0.5 percent dip to $3.918 per gallon last week and a 2.2 cent decline the prior week.

Since reaching a more than four-year weekly high of $4.15 per gallon the week of October 15, diesel prices have gone down a cumulative 23.9 cents. What’s more, prices have been below the $4 per gallon mark for five consecutive weeks and seven of the last eight weeks.

The average price per gallon is up 8.3 cents compared to a year ago at this time.

In its recently updated short-term energy outlook, the EIA is calling for diesel prices to average $3.97 per gallon in 2012 and $3.84 in 2013, with WTI crude oil is expected to hit $94.26 per barrel in 2012 and $88.38 in 2013.

As previously reported, regardless of the fluctuation in diesel prices, shippers are cognizant of the impact diesel prices can have on their bottom line—for better or worse.

And they continue to be proactive on that front, too, by taking steps to reduce mileage and transit lengths when possible as well as cut down on empty miles.

And even through shippers want to adjust budgets in order to offset the increased costs higher fuel prices bring, it is not always an easy thing to manage.

The focus from a supply chain management perspective, according to shippers, is more on utilization and efficiency by doing things like driving empty miles out of transportation networks.

Shippers have told LM that adjusting budgets is only part of the solution when it comes to dealing—and living—with fuel price fluctuation. 

Low diesel prices are expected to continue to be the norm for the foreseeable future.

The EIA recently said that it estimates gasoline prices are expected to drop more than 5 percent in 2013, coupled with rising less than inflation over the next decade.

The average price per barrel of oil on the New York Mercantile Exchange was at $93.15 at press time. The Associated Press reported that this price was down 4 cents from Monday as as analysts predicted a rise in U.S. crude stockpiles, underscoring weak demand for fuel.

Derik Andreoli, Ph.D.c., a senior analyst at Mercator International LLC and Logistics Management’s Oil & Fuel columnist recently said that given the high price for a marginal barrel of oil—like those produced from the Bakken and Eagle Ford shale plays—it is unlikely that prices have much downward flexibility.

Due to this, he said shippers can reduce their exposure to risk by concentrating on packaging and materials handling.

“Work with carriers to design an incentive program designed to reward carriers for increasing fuel efficiency,” said Andreoli. “How carriers pack trailers/containers is as important as how shippers pack their boxes, and shipping less air is the goal here, too. Outside of packing the trailer, carriers can gain significant fuel savings (close to 10%) from switching to single tires (as opposed the double tires which still dominate), and additional savings can be realized through the installation of aftermarket aerodynamics kits. Carriers can also save fuel by reducing idle time and slowing down. There are onboard GPS enabled technologies that can help here.”

Andreoli also noted that shippers should evaluate the location and size of distribution centers.

“There is a trade-off between the savings that can be realized through mega DCs and the increased fuel costs that supply chains organized around them must accept,” he said.


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Article Topics

Diesel · Diesel Prices · EIA · All Topics
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