Diesel fuel prices are a bit of an anomaly in the energy industry. In fact, the cost of diesel continues to steadily decline as the expense of fuel moves in the opposite direction.
Citing the U.S. Department of Energy’s Energy Information Administration, Overdrive Magazine recently reported that the price of diesel dropped more than five cents below the cost it was at this time last year to $3.78 per gallon. According to separate statistics from the U.S. Energy Information Association, the cost of diesel has dropped 0.13 cents since June 2014. For the sixth straight week, diesel prices dropped, and the current value is the lowest it has been since mid-November.
Different regions in the country had varying declines, say California. Overdrive added that the West Coast price change remained stagnant while the New England area led all cost declines with a 3.7-percent dip. The East Coast saw a drop of nearly 2 percent, while the Gulf Coast region was reported to have the nation’s cheapest diesel fuel at roughly $3.75 per gallon. The Midwest closely followed at $3.78.
Diesel declines may affect freight
Due to the recent dips in diesel costs, stakeholders in the shipping industry may begin to see a modest climb in freight. Although the fuel price swings aren’t overly drastic, businesses may want to take advantage of the lowered costs, especially since these figures are projected to modestly decline in the coming months.
According to industry website Transport Topics, diesel is down almost 18 cents since topping out at $4.021 in early March. Oil prices in general were low, with crude oil closing below $97 per barrel on the New York Mercantile Exchange last week, which was the lowest settlement price since February. Despite the unrest in the Middle East, the cost of fuel and oil has been declining slightly over the past few months, which is promising for those in the shipping industry.
It’s unlikely that companies are going to dramatically alter their shipping schedules and operational structures just to meet the declining diesel costs, but shippers can look forward to saving money down the road if these dips continue. The cost of fuel is a major investment for all shipping companies, especially when loads are thousands of pounds. The heavier the load, the more fuel is used to power the truck carrying the contents, and when costs of diesel are lowered, that equates to money saved from a business perspective.