diesel-fuel-sm.gif

Truck fleets best keep eye on diesel fuel prices

Nov. 8, 2010
With U.S. diesel fuel prices averaging just below $3.06 per gallon over the last week – up over a nickel per gallon in the last month and some 25 cents per gallon higher than the same time last year, according to the Energy Information Admin. (EIA), truck fleet owners should keep a close watch on pump prices as winter weather starts to close in

With U.S. diesel fuel prices averaging just below $3.06 per gallon over the last week – up over a nickel per gallon in the last month and some 25 cents per gallon higher than the same time last year, according to the Energy Information Admin. (EIA), truck fleet owners should keep a close watch on pump prices as winter weather starts to close in.

“Winter is typically the ‘high price season’ for diesel, and we’ve seen diesel prices inching up over the last month or so,” Denton Cinquegrana, editor-- west coast spots for the Oil Price Information Service (OPIS), told FleetOwner. “Now, demand for diesel is still way off from pre-recession levels, but it’s getting better slowly – mirroring the slow recovery of the U.S. economy overall.”

Diesel fuel is also benefitting from what’s been dubbed “range stabilization” in terms of crude oil pricing this year, Cinquegrana added. He explained that the price of oil has stayed within a rough $17 range spread between $70 on up to $87 per barrel.

“To be in that range for an entire year is markedly more stable compared to the trend over the last five years as a whole, where we watched oil prices jump from $40 up to $150 per barrel in the summer of 2008 alone,” he pointed out.

However, for oil prices to have “calmed down” for such a long period could mean they are ripe for a breakout this winter, he cautioned. But that will depend on a number of factors, including continued strengthening of the U.S. economy, which would drive up diesel use, as well as colder-than-normal temperatures, which would drive up heating oil (made from the same base petroleum stock as diesel) demand.

“Oil pricing is also much more in line with the equity markets now and far less subject to traditional supply-and-demand pressures,” Cinquegrana pointed out. “Oil prices – and the prices of the fuels refined from it – now react more and more to other economic trends than just to pure supply-and-demand factors.”

For example, he said, a fleet owner might see that diesel fuel inventories are high, yet be paying five cents more per gallon than the week before. That price hike might be largely in response to a run-up in the stock market, or a positive jobs report, or any other financial information that causes the equity markets to move higher, Cinquegrana explained.

“That’s why truckers need to take a ‘macro-economic’ view of fuel pricing now,” he stressed. “How the stock and financial markets behave can cause oil prices – and thus diesel costs – to rise or fall.”

Sponsored Recommendations

Heavy-Duty Maintenance Checklist

A maintenance checklist can help ensure you hit everything necessary during an inspection. Check out our free downloadable checklist to help streamline your repairs.

Five Ways a Little Data Can Save Your Company Millions

While most trucking and logistics companies rely on cellular to keep their work fleet connected, satellite has the ability to connect anywhere and through small data transmission...

Fleet Case Study: 15% YOY Growth for ITDS

Learn how this small trucking company scaled significantly and maintained outstanding customer service without adding additional people. Sylectus TMS can automate operations and...

Unlocking Fleet Safety & Efficiency: The Managed Service Advantage

Want to boost your fleet's safety and efficiency? Tune in now to discover the power of Managed Services in optimizing your safety program, streamlining operations, and making ...

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!