Transportation news: Diesel prices head down for second straight week
May 17, 2011
Diesel prices decreased for just the fourth time in the last 24 weeks—and the second consecutive week—with a 4.3 cent decline to $4.061 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).
This follows a 2 cent dip last week, which dropped the average price per gallon to $4.104. 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 $0.97 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 over the last six months. And the average price per barrel for oil is currently trading at $96.21 per barrel on the New York Mercantile Exchange, dropping sharply since a two-and-a-half year high at $114.83 per barrel two weeks ago.
This current decline, according to industry analysts, could be due to a softening in demand, given a May 12 report from the EIA which indicated that the country’s crude inventories rose by 3.8 million barrels in the first week of May, and that gasoline stockpiles rose 1.3 million barrels, suggesting demand for crude and gasoline is softening, according to a Dow Jones report.
At the NASSTRAC Logistics Conference and Expo in Orlando, Fla. in April, 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.
“We are doing whatever we can to off-set the impact of high fuel prices,” a consumer package goods shipper told LM. “Even though prices are down for now, they are still higher than a year ago and that forces us to approach things differently.”
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