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U.S. on-highway diesel makes its way to $4.094

Part of the reason why diesel prices are so high is that, worldwide, there are more diesel vehicles now and global demand for the fuel is high.

The Trucker News Services

10/9/2012

U.S. average on-highway diesel has increased a penny and a half since a week ago (when it was $4.079) to $4.094, but is up more than a dollar since this time last year ($3.721), a pinch every trucker is feeling in the pocketbook.

California, which consistently has had one of the highest reporting prices according to the Energy Information Administration of the U.S. Department of Energy, saw diesel prices surge to $4.414, compared with $4.376 last week.

The price for diesel in California averaged $4.38 per gallon as of the first week of October, according to EIA.

Both California and U.S. diesel prices have climbed steadily from about $2 per gallon in 2009.

Many California trucking companies that haul agricultural products to storage and to market impose fuel surcharges on farmers and other customers to protect themselves against fuel price fluctuations, said Michael Shaw, spokesman for the California Trucking Association, whose members move 80 percent of the cargo on California's roads each year.

But the truckers who don't add fuel surcharges — especially small independent truckers — may find themselves in financial troubles, and may even stop driving, Shaw said.

"For now, we're trying to ride it out. But if diesel goes over $5, I'm going to have to stop," said Joel Vargas, an independent trucker from Porterville who hauls produce from fields to packing houses. "With that kind of price, I won't be able to support myself and my family."

Indeed, carriers report that fuel is one of their costliest expenses, and when prices fluctuate wildly, even fuel surcharges can’t recover costs quickly enough.

Part of the reason why diesel prices are so high is that, worldwide, there are more diesel vehicles now and global demand for the fuel is high. Other countries have embraced diesel vehicles because of increasing oil prices and the good mileage diesel engines get.

In the U.S., high gas prices have led Americans to consume less gasoline. In turn, refineries have scaled back their overall production to adjust to the lessened demand. However, the demand for diesel fuel remains the same even though refineries are processing less fuel overall.

The introduction of clean diesel, low-sulfur fuel has also contributed to a price jump because, according to the EIA, the new fuel has impacted distribution and production costs.

For diesel prices by region, click here.

Associated Press sources contributed to this report

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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