Diesel prices remain above $3 per gallon mark despite sequential decline

While the price per gallon of diesel fuel remains above the $3 mark there has been a fair amount of fluctuation in recent weeks, according to data from the Department of Energy’s Energy Information Administration (EIA).

For the week of November 22, the EIA reported that the average price per gallon of diesel is $3.176 per gallon. This is a 1.3 cent drop from the $3.184 per gallon for the week of November 15, which was the highest level diesel prices have hit since $3.288 per gallon from the week of October 27, 2008. The week of November 15 is now the high water mark for 2010 diesel prices, topping $3.127 per gallon from the week of May 10. The current average price per gallon of diesel is 38.4 cents higher than it was a year ago, said EIA.

Diesel prices have been at $3 per gallon or more for ten 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 slightly more than $80, on average, during the same period, although it has been trending downward recently.

As of press time oil barrel prices were slightly above $81, with media reports citing Ireland’s debt crisis and tight supplies at refineries as drivers for the recent decline, with the price per barrel down 7 percent from a two-year high of $87.81 per barrel from earlier this month, according to a Dow Jones report.

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. 

A shipper responding to a recent Logistics Management reader survey on fuel costs said in order to be efficient and profitable while dealing with fluctuating fuel prices and fuel surcharges is to hedge any variability with a Fuel Price Index based on the EIA national average.

“This will give some assurance that any small increases are absorbed by the carrier with major increases being shared by the shipper and carrier,” said the shipper. “Using such a vehicle will ensure that carriers will not pull the cost of fuel back on the shipper and in even worse case scenarios use fuel increases to add to their operating margins.”