Diesel remains near the $4 per gallon mark   

Posted By:  Tom Sanderson 
Date Posted:  Wednesday, December 07, 2011  4:55 PM


Weekly retail on-highway U.S. diesel prices decreased by 3.1 cents to $3.931 per gallon. Diesel topped $4 two weeks ago but has dropped nearly 8 cents since then. Diesel remains 23% above the level from one year ago. The recent low price point for diesel was $2.023 on March 16, 2009. A view of weekly prices over the last 3 years shows much higher prices than seen in 2009 or 2010 (second graph). Diesel prices peaked at $4.771 per gallon in July of 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008 (over 13 months). Prices have been back over $3 since October 4, 2010 (14 months). In 2008, diesel exceeded $4 per gallon for 23 straight weeks, compared with 6 straight weeks earlier in 2011. In the 31 weeks since the 2011 peak of $4.124, diesel has fallen by 19.3 cents per gallon. In 2008, in the 23 weeks following the peak, fuel dropped by $2.57 all the way down to $2.20 per gallon.

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Comments:  (2)
Categories: Diesel fuel prices
 

Comments


Kevinaom  commented on  Friday, December 09, 2011  10:01 PM 
The real question is what is the differential between the retail and wholesale price of fuel? This "margin" is critical. I think right now you will find the price carriers are actually paying is substantially less than the DOE number listed above.

Why don't we as an industry stop publishing "DOE" when we know it is disconnected from the real price and start publishing the "average purchase cost" as acquired through COMDATA or OPIS? That is the number I care about.

Tom Sanderson  commented on  Wednesday, December 14, 2011  10:12 PM 
Thanks for an excellent comment. It is certainly true that the DOE diesel index does not represent what carriers actually pay for the reasons you mention and because of significant regional differences. I believe the DOE does have value though for a couple of reasons. First it is consistent and readily available. Second, most fuels surcharge mechanisms still rely on the DOE index, not because of its absolute accuracy but because it relatively accurately measures changes over time which is what the surcharge is meant to cover. A number of companies have changed the surcharge mechanism either by switching to a different index or raising the base or other methods. This is best done during a full bid process. Carriers are not getting rich off the fuel surcharges. Margins are still relatively thin. While it may make sense to shift money between linehual and fuel, I don’t think it is reasonable to think that profit-challenged carriers can survive on less money. In the end, the marketplace sets the price. If you don’t pay enough, you don’t get the truck. If you pay too much, your own company loses its competitive position.

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