Both diesel and gas prices have been slowly creeping upward for the last month and a half, with the last price decrease taking place in mid-December, according to figures from the DOE’s Energy Information Administration. The current diesel price is up 34 cents from a year ago, and gas prices are up 35 cents this week from 2011.

On Monday, U.S. oil futures fell below $97 a barrel, the same day new sanctions were announced against the world’s third-largest exporter, Iran. The sanctions are supposed to make it harder for Iran to sell its oil through traditional banking routes. The idea is to force Iran to sell its oil at a discount, and reduce the oil revenue Iran uses to run its economy and fund its nuclear operations.

Abundant U.S. oil supplies kept prices in check despite the new sanctions against Iran. Crude supplies are expected to keep growing into spring as the petroleum industry ramps up drilling projects.

Brent crude prices rose to $1.35 to finish at $115.93 a barrel in London. The increase is due to winter storms that brought icy temperatures to much of Europe.

Click here to visit Truckinginfo and read the complete story.

The Annual Energy Outlook 2012 Reference case released today by the U.S. Energy Information Administration features updated projections for U.S. energy markets through 2035.

“Our updated reference case projections show natural gas and renewables gaining an increasing share of U.S. electric power generation, domestic crude oil and natural gas production growing, reliance on imported oil decreasing, U.S. natural gas production exceeding consumption, and energy-related carbon dioxide emissions remaining below their 2005 level through 2035,” said EIA Acting Administrator Howard Gruenspecht.

These projections, he said, reflect increased energy efficiency, updated assessments of energy technologies and domestic energy resources, the influence of evolving consumer preferences, and projected slow economic growth.

Domestic crude oil production is expected to grow by more than 20% over the coming decade. Domestic crude production increased from 5.1 million barrels per day in 2007 to 5.5 million barrels per day in 2010. Over the next 10 years, continued development of tight oil combined with the development of offshore Gulf of Mexico resources are projected to push domestic crude oil production to 6.7 million barrels per day in 2020, a level not seen since 1994.

U.S. dependence on imported petroleum liquids declines in the EIA’s projections, primarily as a result of growth in domestic oil production of over 1 million barrels per day by 2020, an increase in biofuel use of over 1 million barrels per day crude oil equivalent by 2024, and modest growth in transportation sector demand through 2035. Net petroleum imports as a share of total U.S. liquid fuels consumed drop from 49% in 2010 to 38% in 2020 and 36% in 2035, according to the EIA’s projections.

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For diesel, the only two regions that didn’t see a price decrease were New England, where the average diesel price rose by one tenth of a cent to $4.077, and California, where prices rose by half a cent to $4.121. As usual, California claims the highest average diesel prices in the country.

Crude oil futures settled higher this week after the European Union agreed to an embargo on oil imports from Iran starting July 1.

Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled 1.3%, or $1.25 higher, at $99.58 a barrel. ICE North Sea Brent crude settled up 72 cents at $110.58 a barrel.

The EU embargo, which was widely expected, advances U.S.-led global efforts to restrict Iran’s economic lifeline because of what it says is Tehran’s refusal to halt efforts to gain nuclear weapons.

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The firm also believes that the vertical integration trends among global truck manufacturers may lead to more intricate partnerships with lubricant makers, fostering the creation of “private label” engine oils, transmission fluids, etc., which could ultimately result in tighter OEM engine oil specifications to maintain warranty coverage.

In an interview with Fleet Owner, Sandeep Kar and Wallace Lau – respectively the global director of commercial vehicle research and truck research analyst for Frost & Sullivan – explained engine oils change to much lower viscosity formulations over the next six years to boost engine efficiency and thus fuel economy.

Research by both Kar and Lau indicate that 5W-40 and 5W-30 – even so-called “zero weight” oil blends of 0W-20 and 0W-30 – are being developed for medium- and heavy-duty truck engines in an attempt to generate the fuel savings necessary to meet federal fuel economy rules. However, Lau stressed that the challenge for such “low” and “no weight” oils will be maintaining engine protection properties as well as temperature handling characteristics.

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Depending upon which analysts you trust, a blockade of the Strait of Hormuz could cause fuel prices to rise by as much as 50%. Right now, the bet is that Iran will back down, largely because a blockade would be as damaging to Iran and its key oil customers as it would be to the rest of the globe, but the saber rattling on both sides is rattling nerves worldwide, nonetheless. For trucking, a sudden steep spike in fuel prices could seem like 2008 revisited, only crueler.

The crisis at Hormuz may never happen, but the effect of change at another of the world’s major waterways, the Panama Canal, is absolutely guaranteed to impact the trucking industry. By 2014, if the construction schedule holds, shipping patterns will be forever altered—and trucking will be dragged along in the wake of this enormous tidal shift, like it or not.

A wider canal with a larger set of locks, expected to double the amount of goods that can pass through the Panama Canal each year, is scheduled for completion in 2014. According to a recent Science column in the New York Times, the expansion will allow much bigger container ships and other cargo vessels to easily reach the Eastern United States, altering patterns of trade and putting pressure on East and Gulf Coast ports like Savannah, GA., and New Orleans, LA to deepen harbors and expand cargo-handling facilities.

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Reaction to Federal Fuel Efficiency Standards Mostly Positive

From environmental groups to trucking lobbies to truck OEMs and engine makers, the reaction to yesterday’s announcement of federal regulations on fuel efficiency and greenhouse gas (GHG) emissions for commercial vehicles is nearly universally positive.

The rules will take effect between 2014 and 2018 and will impose different fuel efficiency requirements on medium- and heavy-duty trucks based on the size and weight of a given vehicle type. For example, most – but not all – tractor-trailers will be required to achieve up to approximately a 20% reduction in fuel consumption and GHG emissions by model year 2018, which the government estimates will save up to 4 gals. of fuel for every 100 mi. traveled.

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HOS Rules Lifted by FMCSA for Carriers Responding to Oil Spill in Gulf of Mexico

The Federal Motor Carrier Safety Administration announced the extension of its temporary lifting of hours-of-service rules for haulers of some emergency supplies to four southeast coastal states because of the oil spill off Louisiana’s coast. Haulers of certain loads are exempt from HOS through May 30 at 11: 59 ET if transporting to or from the states, both within the affected region and outside it.

FMCSA had declared a regional emergency affecting Louisiana, Mississippi, Alabama and Florida for April 30 through May 14 at 11:59 p.m. ET. “However, the need for emergency relief has not abated,” Darrell Ruban, FMCSA field administrator, wrote this week in FMCSA’s amended declaration of regional emergency.

Click here to visit CCJ and read the complete story.

Diesel fuel will climb to average $2.95 a gallon this year before rising to $3.16 in 2011, the Department of Energy said.

Trucking’s main fuel averaged $2.46 a gallon last year, DOE said in its monthly short-term energy outlook released Wednesday.

The projection is in line with a previous department forecast. DOE’s latest weekly price survey released Feb. 1 showed a 5.2-cent decline to $2.781 a gallon.

Click here to visit Transport Topics and read the complete story.

The Department of Energy held its diesel price forecast for 2009 steady at $2.46 a gallon, but bumped its projection for next year by a nickel from a previous forecast.

Trucking’s main fuel will average $2.84 in 2010, DOE said in its monthly short-term energy outlook released Tuesday – up slightly from the $2.79 it forecast last month.

In its latest weekly pump-price survey released Monday, DOE said the national average price of diesel was $2.625, the highest price since late November.

Diesel averaged $3.80 last year, peaking on July 14, 2008, at a record $4.764 a gallon.

Gasoline will average $2.34 this year, down slightly from the $2.36 predicted last month, DOE said. Monday’s weekly survey showed a 9-cent increase to $2.647.

This year’s prices are well below last year’s $3.26 average, a record. The single-week record high for gas was $4.114 a gallon, set on July 7, 2008.

DOE also lowered its forecast for crude oil, saying it will average $59.94 a barrel, down slightly from the $60.35 it projected last month. The 2010 forecast was unchanged at $72.42.

Oil averaged $99.57 per barrel last year and set a New York Mercantile Exchange closing-price record of $145.29 last July.

[source - ttnews.com]

]]> http://www.myettnews.com/2009/08/doe-raises-diesel-price-forecast-for-2010/feed/ 0 http://www.myettnews.com/2009/08/trucking-takes-on-fuel-speculators/ http://www.myettnews.com/2009/08/trucking-takes-on-fuel-speculators/#comments Wed, 12 Aug 2009 16:48:32 +0000 Rhonda Flathman http://www.myettnews.com/?p=1046 With the uncertain stability of fuel prices hanging above the trucking industry like a Damocletian sword, the American Trucking Association (ATA) is taking on the Commodity Futures Trading Commission (CFTC), calling for regulation to help combat volatility in 2008 costs that put some carriers out of business and left many others struggling. Steven Graham, vice president of Schneider National, addressed the commission on behalf of the ATA. Because of the highly competitive nature of trucking and its low profit margins, any major swing in the cost of fuel can be detrimental. ATA hopes to rein in excessive speculation that drives up the price of fuel to help protect the viability of the trucking industry.

Industry Groups Back Regulation to Combat Volatile Fuel Prices

At hearings being held by the federal government’s Commodity Futures Trading Commission (CFTC), the trucking industry is calling for more regulation of the markets that trade in petroleum futures – specifically to head off the type of fast upward swings in diesel prices that ravaged motor carriers in 2008.

“Trucking is a highly competitive industry with very low profit margins [and] this explains why many trucking companies are reporting that volatile fuel prices have greatly suppressed profits, if they are making a profit at all,” said Steven Graham, vp of TL carrier Schneider National, in testimony before the commission today. “Our industry cannot simply absorb this rapid increase in fuel costs. While some companies are able to pass some of these costs through to their customers, we rarely recoup the full additional expense.”

Graham – speaking on behalf of the American Trucking Assns (ATA) – said sudden fluctuations in operating expenses, especially fuel, wreak havoc on the trucking industry. Coupled with the severe downturn in the economy and soft demand for freight transportation services, trucking companies are now struggling to survive – noting that in 2007 and 2008, over 5,000 trucking companies with at least five trucks failed.

While petroleum market fundamentals are rapidly changing – including increased demand from China and India, supply disruptions in Nigeria and Venezuela, and the declining value of the U.S. dollar – they do not fully explain the dramatic rise and fall of the price of oil last year, said Graham.

“There has been a significant increase in the amount of dollars invested in the petroleum derivatives market by non-commercial participants, leading us to conclude that this increased speculation may be partially responsible for the dramatic rapid increase in oil prices,” he said.

Graham pointed out that between 2002 and 2007, the capital allocated to commodity index trading strategies rose from $13 billion to $260 billion. Such a huge increase in dollars invested in petroleum derivatives markets and the prevalence of exempt transactions and electronic exchanges that are not regulated by the CFTC makes it even clearer that excessive speculation in the unregulated energy and swaps markets caused and continues to cause unnecessary and substantial volatility in the agriculture and energy markets, he said.

As a result, the trucking industry believes the federal government should take steps to increase the transparency of the derivatives markets and establish reasonable position limits for non-commercial traders to prevent excessive speculation, Graham stressed.

“Trading in derivative products and some level of speculation to ensure liquidity in the derivative markets is beneficial,” he noted. “However, the CFTC should control excessive speculation that increases volatility or artificially inflates the price of the underlying commodity.”

Some market experts agree with ATA’s call for tighter regulation of the petroleum futures market. “The commission shouldlook into better disclosure of the entities that participate in all futures and derivatives’ markets,” said Tom Kloza, chief oil analyst for the Oil Price Information Service (OPIS), in his online blog late last month. “It [the CFTC] also should consider whether antiquated position limit thresholds need to be updated.”

He said that the public, and to some extent the petroleum business, wonders whether a huge foreign production concern could hypothetically move huge sums of money in unfettered fashion into a commodity– with dire consequences for the users of said commodity.

“I’ve compared the futures and options markets before to a large superhighway,” said Kloza. “The bankers and professional traders and employees of fee-based exchanges would like this toll road to have no speed limits, no traffic lights, no guard rails, and few state troopers, while some of the end-users would like to shut the highway down.”

A compromise in the form of regulation makes sense, said Kloza. “Ultimately the polemic between the speculative pro-liquidity crowd and the suspend-trading-in-core-commodities crowd is not as clear cut as the battle between good and evil that is playing in your local metroplex this summer,” he pointed out. “[But] stay tuned. The hearings on his matter in Washington this summer will make for interesting theater.”

[source - trucknews.com] ]]> http://www.myettnews.com/2009/08/trucking-takes-on-fuel-speculators/feed/ 0