Diesel Jumps 7.2¢ to $3.385 a Gallon

October 10th, 2018


Category: Transportation

(Transport Topics) – The U.S. average retail price of diesel jumped 7.2 cents to $3.385 a gallon as oil prices remained at levels not seen in four years. It was the seventh consecutive weekly increase for diesel, and the fuel has risen 17.8 cents a gallon since Aug. 20.

Trucking’s main fuel costs 60.9 cents a gallon more than it did a year ago, when the price was $2.776, the Department of Energy said Oct. 9, reporting the day after the Columbus Day holiday.

The average price was up in all regions, and highest in California, reaching $4.111 a gallon.

The national average price for regular gasoline rose 3.7 cents to $2.903 a gallon, DOE’s Energy Information Administration said. The average is 39.9 cents higher than it was a year ago. The average gasoline price rose in all regions except the Rocky Mountain district, where it dipped 0.1 cent. The steepest increase came on the West Coast at 6.3 cents a gallon.

At the same time, Hurricane Michael pushed up the Gulf of Mexico with winds exceeding 100 mph Oct. 9, and about one-fifth of oil output in the Gulf off to the west was shut down.

The hurricane was expected to come ashore Oct. 10 on the Florida panhandle then sweep northeast into the same areas that Hurricane Florence drenched and disrupted about a month earlier.

The 2018 Atlantic hurricane season produced 14 named storms as of Oct. 9, including seven hurricanes.

In California, one carrier has fuel delivered to its terminal. It also has ordered electric trucks and is lined up to test another truck maker’s electric models, too.

“The majority of our fuel is bought in California. Fuel cost is always a challenge,” Joe Finney, chief operating officer for Dependable Supply Chain Services, told Transport Topics.

“We negotiate our fuel deliveries, and wet hose [from fuel trucks] all of our locations and as many of our tractors as we can. We purchase fuel outside on a limited basis,” Finney said.

The fuel trucks can come twice a day at its bigger locations, he said.

Dependable’s less-than-truckload business is its largest division, and the Los Angeles-based company operates about 500 Class 8 trucks, mostly day cabs, and 50 straight trucks and uses about 300,000 gallons of diesel each month.

Dependable does not pre-buy the fuel, “but we do get a great price,” he said. “And we don’t have to pay a driver to fuel.”

Dependable is looking at more alternatives to diesel after trying liquefied petroleum gas, too.

It has put down deposits on 10 battery-electric heavy-duty trucks from Tesla Inc. “There are some [state] grants aimed at zero-emissions vehicles that we looking to take advantage of,” he said.

The carrier also will be involved in the upcoming tests of medium- and heavy-duty electric models from Volvo Trucks. “The exact makeup of the trucks is still being worked out,” Finney said. “We will probably get six or eight of their trucks.”

Meanwhile, globally, supplies from Iran and Venezuela have been shrinking, creating a “risky situation” for the world economy, International Energy Agency Executive Director Fatih Biro said. At the same time, spare crude in American tanks probably increased for a third straight week, according to a Bloomberg News survey.

“The market is just struggling with the expectation of the reduction in Iranian exports combined with physical evidence in the United States that inventories are rising,” Ion Energy Group consultant Kyle Cooper told Bloomberg.

Crude oil futures trading on the New York Mercantile Exchange closed Oct. 9 at $74.85 per barrel compared with $75.30 on Oct. 1.

In related news, President Donald Trump plans to change U.S. policy to allow the sale of so-called E15 fuel — which contains 15% ethanol and 85% gasoline — year-round. The U.S. Environmental Protection Agency, which regulates air pollution from gasoline, currently blocks the sale of E15 from June 1 to Sept. 15 in areas where smog is a problem.

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