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View Full Version : Is the price of diesel fuel ever going to drop?


jkski
03-28-2008, 09:05 AM
I realize that this is a somewhat loaded question, however, hopefully someone out there has some insight to offer. From what I have read in other posts and other places, it seems that it "CAN" come down, but the question is will it?
Anyone have any insight?

ShamrockIV
03-28-2008, 09:19 AM
i think the goverment might step in and do something about it. too many trucks on the road. this country moves by truck!!

snork
03-28-2008, 09:22 AM
Nope. Halliburton need too much for the current supply
Exxon-Mobil want to make profits to match national dept, somewheres in the trillions

flipper
03-28-2008, 10:08 AM
Nope, and yeah it sucks for me....but I really feel sorry for the truck drivers that are just trying to make a buck, and can't because of fuel prices.

endl
03-28-2008, 10:39 AM
It cost a big truck roughly .80 cpm right now just for fuel. National average Monday was 3.974. We will all pay for this and not just at the pump.

A lot of small to midsize companies do not do a good job of managing fuel cost and that will cause companies to close their doors. Demand will continue to increase for trucks and we will see rate increases across the markets as well.

stuartmcnair
03-28-2008, 10:53 AM
A lot of small to midsize companies do not do a good job of managing fuel cost and that will cause companies to close their doors. Demand will continue to increase for trucks and we will see rate increases across the markets as well.

That's not what we are seeing right now. The smaller companies are doing everything they can to better manage their costs. They are still running their trucks but now competition is so tight they can't raise their prices at all. Instead of making around a 25% profit they are down around 5%.

Through smarter management and IT solutions like Peoplenet and Qualcomm they are better able to manage the administrative side to eliminate costs of doing business and streamline the trucking operations.

endl
03-28-2008, 11:32 AM
I dont disagree that some prevail from smarter management, and yes IT definately aids this progression. Lots and lots of small and midsize companies do not have the capital and or resources and get caught in the spiral downward. Rates both base and fuel surcharges have increased the last several years. Companies that do not do a good job of distinguishing between base rate increases and fuel increases are the ones who end up loosing.

Load indicators are up which mean demand is greater than it was last year at this same time. Almost two times what it was last year.
Trucking company closings are up as well. Some of this demand is econmic but some and I would say quite a bit is attributed to the trucking company closing's and downsizing.

I am not sure what margins you are talking about gross or net but if you can find any trucking company making 25% you better buy it. If they can operate at 5% net margin even thats very good.

Bottom line fuel is way up and not going down soon. Everything you and I touch is moved by a truck at somepoint. And most things multiple times. We will all pay for this.....inflation is here!

stuartmcnair
03-28-2008, 04:46 PM
All I can tell you is we monitor the trucking industry and talk to truckers and fleet managers every day, all day long. The work is available but the costs are not rising like you would think they are. Margins are gone. Instead of making a nice profit now the companies are paying the bills. A few years ago there was a big shakeout in trucking and a lot of truckers parked them and walked away. We are not seeing that at this point but it would not surprise me.

When the loads go beyond capacity and the rates increase then we will all feel it in the pocketbook. And it will hurt.

Jerseydave
03-30-2008, 09:29 PM
I run my truck (food delivery) 3 days a week, fuel cost over $300/week. I won't deliver any orders under $300 unless it's on the way to another stop. Within 3 years fuel has gone from under $1.50/gal to over $4.00/gal.

On the bright side diesel went down $.05 two days ago. WHOOPY!

Hammer
03-30-2008, 09:45 PM
On the bright side diesel went down $.05 two days ago. WHOOPY!

Yea right after I put $160.00 in my rig. But I'll need another this week. And I'm just a one truck construction business. Went from $60 a week a year ago to $160. And people think I'm charging too much. Lately just scraping by.

Slinkyredfoot
03-30-2008, 09:46 PM
Nope, and neither will gas...get used to it, Barak OsamaOboama ot ejtever his name is, is gonna solve this issue, just wait and seeeeeee....:rolleyes: :headbang: :dance: :headbang:

Workin' 4 Toys
03-31-2008, 11:11 AM
A local fuel stop.... Should be closer to $5 in a couple weeks.

flipper
03-31-2008, 11:13 AM
$4.21 by my house this morning....

defender1009
03-31-2008, 02:17 PM
I learned a lot from reading this recently----looks like the cost of diesel is going to be a much bigger issue than the cost of gasoline. IMHO, worth a couple minutes of reading time if you're curious about stuff like this.

Should American Vehicles go Diesel Just When the World is Running Short of it? - The Steering Column

BY CSABA CSERE
April 2008

Dare on the brink of making a big comeback. The Detroit show in January featured all manner of diesel-powered machines, ranging from the Jeep Renegade diesel hybrid concept to the Audi R8 supercar concept with its 500-hp oil-burning V-12. A bunch of diesels will come to market later this year, and I believe Americans will happily buy good diesels, as Mercedes-Benz discovered in 1982 after the second gas crisis, when 79 percent of the cars it sold in the U.S. were powered by diesel engines.

But there are a couple of major differences between the diesel market today and the one 25 years ago. Modern diesel engines are far more complicated because they must meet today’s stringent emissions regulations. Fitted with 20,000-psi fuel-injection systems, particulate traps, oxidation catalysts, and urea-activated NOx catalysts, the upcoming 2009 diesels are expected to cost from one to two grand more than their gasoline equivalents. Since most vehicle purchases are motivated by economics rather than environmental ideology, buyers will look closely at this price increment to determine how quickly a diesel’s improved mpg will pay off.

And that brings us to the other big change over the past 25 years: Diesel now costs more than gasoline. As this is written, the average price of regular gasoline in America is $3.11 per gallon. Diesel is $3.38. That’s quite a switch from the early ’80s, when diesel fuel was cheaper, averaging 13 percent less a gallon than gas.

Let’s say that one of those early Mercedes diesels was getting about 26 mpg. That translates to roughly 4.3 cents per mile at 1981 fuel prices. A comparable gasoline car would have gotten about 20 mpg, costing 6.4 cents per mile in ’81. Fast forward to today’s fuel prices. With cars getting the same 26 and 20 mpg, a diesel driver would spend 13.0 cents a mile, and the gasoline driver would spend 15.6 cents. So, in per-mile fuel saving over the past 25 years, diesels have gone from having a 33-percent advantage over gasoline engines to just a 17-percent spread.

The advantage of a diesel is half what it once was. Is it likely to be further eroded over the next few years? According to Ron Planting, an economist at the American Petroleum Institute (API), most of the world’s rapidly growing economies, such as China’s and India’s, use more diesel and less gasoline from each barrel of oil than we do in America, where 40 to 45 percent of each barrel ends up being refined into gasoline. Although the energy demand of these growing economies is one of the causes of today’s record-high crude-oil prices, that growth is putting even greater pressure on the world’s diesel supplies.

Today’s expensive fuel encourages conservation worldwide, but since diesel fuel is used more in manufacturing and commercial applications than is gasoline, the push for energy conservation tends to reduce gasoline use more than diesel use.

Then there’s Europe, where governments have used various incentives, including much higher taxes on gasoline than diesel, to encourage customers to purchase diesel-powered cars. (At this writing, gasoline costs about $7.50 a gallon in Germany; diesel is about a buck cheaper.) This program has been wildly successful—diesels today comprise about half of new-car-and-truck sales. In Europe, the demand for diesel equaled gasoline demand about 10 years ago and has since surged well ahead.

The arrival of low-sulfur regulations has also added a few cents to the price of a gallon of diesel due to the more complex refining process required to extract the sulfur.

Basic economics dictates that when one commodity has higher demand than another, its price will rise faster, and that’s exactly what we’ve seen with diesel fuel and gasoline. So why don’t the oil companies simply produce more diesel than gasoline from each barrel of crude oil? Unfortunately, it’s not as simple as twisting a few dials at the world’s oil refineries.

Al Mannato, a fuel-issues manager at API, explains that oil refineries tend to fall into two categories: catalytic cracking and hydrocracking. Most U.S. refineries are set up for catalytic cracking, which turns each barrel of crude oil into about 50-percent gasoline, 15-percent diesel, and the remainder into jet fuel, home heating oil, heavy fuel oil, liquefied petroleum gas, asphalt, and various other products. In Europe and most of the rest of the world, refineries use a hydrocracking process, which produces more like 25-percent gasoline and 25-percent diesel from that barrel of oil. So the rest of the world is already maximizing diesel production. In fact, despite using a refining strategy that minimizes the production of gasoline, Europe still ends up with too much of the stuff, so it exports it to America—about one of every eight gallons of gasoline that we consume.

Meanwhile, Americans are already using most of the diesel fuel that our refineries produce, so if sales of diesel cars take off, keeping the diesel flowing here will put further demands on tight worldwide diesel supplies and probably cause the price to rise even more. Our oil industry could, of course, start converting its refineries from catalytic to hydrocracking and start producing more diesel and less gasoline.

Doing so—and here’s the Catch-22—would reduce the output of gasoline and likely increase its price. Moreover, such a switch, Mannato explains, amounts to a major refinery change that would take 5 to 10 years to accomplish. Building some new hydrocracking refineries would add diesel capacity without squeezing gasoline supplies, but due to their nearly universal unpopularity, there hasn’t been a new refinery built in America since 1979.

Despite the merits of modern diesels, anyone who expects them to solve our energy problems stands to be disappointed

http://www.caranddriver.com/features/columns/c_d_columns/should_american_vehicles_go_diesel_just_when_the_w orld_is_running_short_of_it_column

SierraDump
05-24-2008, 08:49 PM
I've been paying $5.20 in town when I'm close to Empty --- Otherwise I drive 30mins to Reno, NV where it was $4.60.

Jerseydave
05-25-2008, 07:27 AM
2 years ago I was waiting impatiently for GM to start building diesel-powered Suburbans..................now I wouldn't consider buying one of them at all!

Diesel here is up to $4.99/ gal. and I fill-up 3 times a week in my work truck. :(

bigmac
05-25-2008, 08:06 AM
It will moderate a little when the US economy comes back and the dollar gets stronger, but the cost of oil is mostly a supply-and-demand issue. The USA's strength as a worldwide oil consumer used to give it a lot of power in determining the worldwide price, but our position in that chain is getting lower and lower as China and India "emerge", and our "demand" is ultimately going to be a drop in the bucket.

Congress may step in and try to do something, but the US doesn't have the money to support oil subsidies, and if congress does step in, it will certainly cost us in taxes. They've been looking at the oil industry pretty hard over the last 3 years, including the recent hearings. Their conclusion so far is that they can't step in. They probably will anyway, but I strongly doubt it will make much of a significant $$$ change.

We had a similar supply-and-demand issue in the 70's, and the price went high. That was different, though, because everybody knew that the US was the 900 lb gorilla of oil consumers back then. Now however, we're just another one of the monkeys. Why should they (OPEC) consider dropping the price to encourage US oil consumption when they have a much larger customer in China/India?

djhuff
05-27-2008, 08:57 AM
On the China scenario, their demand will drop. China subsidizes their gas to a certain price. With the price of oil rising, it is bleeding that government dry. At some point they are going to have to lower their subsidies, then worldwide demand will drop, bringing the price back in line.

I personally dont' think we will ever see the price back below $3.00, but it should stabilize soon. There are so many factors pushing the price higher and higher, China and India are only one, the commodities speculators are another. The price per barrel will drop, and when it does, there are going to ba a lot of hedge funds that are going to lose significant value, and I won't feel the least bit bad for them.