DOT Safety Regulation Update Fast-Fax™
Week of February 27, 2012
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Truckers nationwide are beginning to feel the pressure of increased prices at the pump. Now, news that the latest in a series of diesel refineries is closing means the problem will only get worse.
Perhaps you have already experienced this yourself: All over the country, truckers are pulling into fueling stations and finding the cost of diesel is eye-wateringly high.
The price of fuel is up for a number of reasons including, increased demand, trouble in the Middle East and rampant Wall Street speculation. However, truckers in the Northeast are being hit by another major problem; several refineries of the Ultra Low Sulphur Diesel have closed or are closing making demand on truck fuel incredibly tight.
A look at the numbers reveals the issue: Already, diesel’s national average is up 33 cents from this time last year. On Monday, the nationwide average for fuel was $4.09 a gallon. Predictions are that, by Memorial Day, prices may be well over $5 a gallon.
The price increases are coming from a wide variety of sources. Increased global demand, particularly from India, China and Brazil has slowly pushed up prices over the last few years. The situation in Iran and the wider Middle East has caused concerns about future supplies, rising prices further. Finally, oil speculation on Wall Street is artificially increasing the price of fuel as traders seek to capitalize on the market. This all adds up and we may see record prices later this year.
Along with the fuel price increases comes news that things are only likely to get worse. Oil company, Sunnoco announced that, if it couldn’t find a buyer, it would close a diesel refinery responsible for 24% — or 335,000 barrels a day — of East Coast capacity.
Predictions are ranging from bad to dire. The Energy Information Administration (EIA) warns that the East Coast has already lost major refiners in the last year. Two weeks ago, a 350,000 barrel a day refinery in the US Virgin Islands, which served the East Coast, was closed. Last fall, two more refineries were closed; one produced 178,000 barrels a day, the other 185,000 barrels a day.
All together, the East Coast has lost 50% of its refinery capacity. While there is plenty of fuel being produced in other areas of the country, transportation problems are being predicted, forcing shortages and subsequent price-hikes.
Hope From the Government
To offset the price increases in the Northeast, the Energy Department has announced that it may release some of the 1 million barrels of diesel it stores in the Connecticut and Massachusetts heating oil reserve.
There is no confirmed word on when or even if this will definitely happen. It is hoped that if it does happen, the move will force the markets to lower prices. Until then, the industry will have to sit and wait with everyone else.
Data Courtesey of EIA
National fuel prices are an average of 33 cents higher than they were this time last year. Prices in February and March of 2012 rival those of the height of the summer of 2011.
The average price of fuel in New England has grown at an accelerated pace compared to the rest of the country. Prices are already higher than the national average and have already surpassed the peaks of 2011.
Editor: Roxanne Swidrak, Vice President, Operations • 1-800-253-5506 • www.FoleyServices.com • Vol. 111, No. 728 • © Foley Carrier Services, LLC. 2011