The Department of Energy’s Energy Information Administration (EIA) reported earlier this week that the average price per gallon of diesel gasoline dropped 1.6 cents to $2.786 per gallon.
This snaps a stretch of recent gains in recent weeks, due to the impact of Hurricanes Harvey and Irma on freight transportation and logistics operations. From the week of August 28 to the week of September 4 after Harvey hit Texas that week’s average price jumped 15.3 cents to $2.758 per gallon, which at that time was the highest weekly level going back to $2.782 from the week of July 20, 2015 and the largest weekly gain since March 2011.
Analysts at Fleet Advantage, a provider of truck fleet business analytics, equipment financing and asset management, told LM that the shortfall that may occur with oil and refining capabilities, as a result of Harvey, will surely create an under capacity situation and fuel prices will likely increase.
“Capacity and volume demand drive price and volume demand and capacity will likely become unbalanced,” the company said. “We can expect prices to increase not only on fuel but also on supplies and materials. Production will be affected negatively and other production resources outside of the disaster areas will have to fill in behind the damaged plants. We always counsel our fleet truck partners to pay close attention on fuel and diesel prices, even when prices are low. Diesel can represent a significant portion of operational costs for a truck fleet company, which is why many are now shifting their strategies to a shorter operational lifecycle. This ultimately helps drive down costs not only for the fleet operator, but throughout the supply chain.”
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