Some good news for 2013

Some good news for 2013

by Cliff Lynch
3. January 2013 11:57

Some good news for 2013

In a bit of good news for 2013, the American Automobile Association (AAA) predicts that the price of gasoline will be lower this year than in 2012. Last year was the highest price on record at an average price of $3.60 per gallon, nine cents higher than in 2011. Even though the price was accelerating at the end of 2012, AAA forecasts a lower average for 2013. Since their prediction did not include the price of diesel fuel, I turned to the U.S. Energy Information Administration (USEIA) to see what they had to say.

At one time, diesel fuel prices were somewhat lower than those on gasoline, but since 2004, this has no longer been the case. On January 2, 2013, the price on diesel fuel was $3.915 per gallon, about ten cents higher than on the same date last year. However, here again there was more good news. USEIA is predicting an average price of $3.83 for the year. Several factors can affect this of course, i.e. the price of crude, refining costs, and taxes; but the big unknown is the weather. If we have an unusually cold winter, the demand for heating oil could negatively affect the supply and price of diesel fuel. Diesel fuel and heating oil combined make up a category called "distillate fuel" and are produced together, setting the stage for a possible tug-of-war for available supplies.

night diesel
Bright outlook for fuel in 2013. Image.

Notwithstanding the possible impact of weather, the forecasts are encouraging and hopefully will be a positive omen for 2013. Couple that with the fact that several carriers are having very good results with natural gas-fueled vehicles, and we just might have a decent fuel year. It would be nice to have a year when supply chain managers did not have to worry constantly about the price of fuel and its impact on their operations.

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