The U.S. average price for diesel fuel increased 10 cents over the last seven days, rising to $3.987/gal. from $3.887/gal. during the week of Nov. 7, according to data tracked by the Energy Information Administration (EIA).
Since early October, average diesel prices are up a whopping 26 cents per gallon, with fuel now over 80 cents per gallon more expensive compared to the same period in 2010, EIA noted.
Several factors are combining to drive diesel higher, according to analysts, with the biggest being a 20% surge in oil prices over the past six weeks – a surge experts say is partly the result of a weaker dollar, a reduction in oil inventories due to decreases in production, and growing tensions over Iran’s nuclear program.
In particular, the 1.4 million barrel reduction in oil stocks reported by the EIA last week caught experts off guard, as many had expected inventories to increase by 500,000 barrels. That reduction of available supply combined with increased demand – China, for example, imported 29.6% more crude oil in October this year compared to the same month in 2010 – helped spur the jump in oil prices over the last month and a half.
By contrast, gasoline prices increased just over a penny per gallon during the past week, according to the agency’s figures, with average U.S. pump prices reaching $3.436/gal. compared to $3.424/gal. the week of Nov. 7. However, compared to the same time last year, the U.S. average price for gasoline is up over 54 cents per gallon.
The rise in diesel fuel prices is being felt directly on the bottom line of truckers as well. For example, according to Covenant Transportation Group’s third quarter earnings statement, higher diesel prices resulted in a 1.5 cent per mile increase in its per mile cost for fuel, net of fuel surcharge revenue, compared with the third quarter of 2010.
Trucking’s concern with higher fuel prices is not just limited to such bottom line impacts, noted Kenny Vieth, president and senior analyst with ACT Research Co.
“Roughly every penny’s worth of change to the price of gasoline or diesel equates to $2 billion more in annual spending of fuel,” he explained in an earlier interview with Fleet Owner. “Right now, [higher] gasoline and diesel prices equates to about $160 billion a year extra being spent by consumers on fuel and not on goods – purchases that translate into freight.”