Diesel Slides 1.4¢ in First Decline Since Aug. 20

(Transport Topics) – The U.S. average retail price of diesel inched down 1.4 cents to $3.380 a gallon as crude oil prices slipped amid growing U.S. inventories of crude.

It was the first decline in the price of diesel since Aug. 20.

Trucking’s main fuel costs 58.3 cents a gallon more than it did a year ago, when the price was $2.797, the Department of Energy said Oct. 22.

The national average price for regular gasoline fell 3.8 cents to $2.841 a gallon, DOE’s Energy Information Administration said. The average is 36.2 cents higher than it was a year ago.

Diesel averages fell in all regions except New England, where the price rose by 0.7 cent to $3.368 a gallon, and the Rocky Mountain area, up 0.8 cent to $3.408.

One truckload fleet executive said he relied on new Class 8 trucks and certain components for continual improvements in average miles per gallon.

New trucks the carrier bought in 2017 were more fuel efficient than those bought in 2016, and 2018 trucks are the most fuel efficient yet, said Brian Matthews, vice president of operations at truckload carrier American Central Transport Inc.

“We are primarily concerned with spec’ing our equipment. We hope the 2019s we are buying now will do better just straight out of the gate,” he said.

Kansas City, Mo.-based American Central Transport buys 1.1 million gallons of fuel a quarter and operates 300 trucks.

The latest features added on to boost fuel mileage are predictive cruise control and a tire pressure monitoring system for the tractor — its trailers already use a self-inflating system.

“It does increase the cost of the truck but gives us that mpg improvement we are looking for,” Matthews said. “We are going to keep investing in different technologies.”

The carrier also has a quarterly fuel bonus reward program for the top 25% of its drivers, who can earn up to $500 as an incentive to maximize mpg. “It has been a success,” Matthews said.

Another carrier executive also was watching fuel prices closely.

“We have noticed obviously an increased spend on fuel,” said Robert Ragan, chief financial officer at Melton Truck Lines Inc.

“The way we look at fuel is that there are three different components. One is how well you buy it, your negotiated discounts. Another is our mpg, and we have to do everything we can to conserve fuel, whether it’s fuel bonuses for the drivers, auxiliary power units or automatic transmissions. That’s our obligation to our customers — to have the best mpg possible,” Ragan said.

The last component in managing fuel is the surcharge, he said. “Our net cost per mile after surcharges, when you put those three buckets together, is up slightly, but not significantly,” he said.

The Tulsa, Okla.-based flatbed carrier runs 1,220 trucks and its gross spend on diesel year to date through September is about $43 million, Ragan said.

Melton Truck Lines ranks No. 92 on the Transport Topics Top 100 list of the largest for-hire trucking companies in North America.

West Texas Intermediate crude futures on the New York Mercantile Exchange closed at $69.17 per barrel Oct. 22 compared with $71.78 on Oct. 15.

Crude settled below $70 a barrel for a fourth straight session as Saudi Arabia backed away from using its oil wealth as a diplomatic hammer and American inventories expanded at the fastest pace in more than a year and a half, Bloomberg News reported.

Any disruption to output from the Saudis or other major producers would be buffered by U.S. producers who have been pumping more than 10.5 million barrels a day since April. American crude stockpiles probably rose by 3 million barrels the week of Oct. 15 for the longest streak of weekly increases since March 2017, according to a Bloomberg survey.