Diesel fuel prices fall, keeping truckers competitive with rails

NEW YORK (AP) — With the price of diesel down for the sixth straight week, truckers may breathe a sigh of relief. But some analysts warn the break could be short-lived.

The U.S. average cost for on-highway diesel fell about 6 cents to just under $4.15 a gallon last week from a week earlier, according to the Energy Information Administration. Diesel has fallen about 13 percent since a record on July 14 of about $4.74 a gallon, but it is still up nearly 45 percent from a year ago.

Longbow Research analyst Lee Klaskow said the recent relief at the pump gives an extra boost to truckers, because most companies have fuel surcharges that are delayed by one to two weeks. That means some truckers are still gauging the price they charge shippers by a higher price of diesel than the current price.

And as fuel prices go down, truckers can become more competitive with railroads, which are about four times more fuel-efficient. Grabbing business from the rails could spur demand, which would also allow truckers to charge higher prices.

Truckload carriers, which haul freight directly from the shipper to receiver, are also benefiting from increased demand amid fleet reductions and bankruptcies, Klaskow said. Although this should spur better pricing across the industry, Klaskow notes rails still have a leg up with historically strong pricing.

The EIA predicts diesel fuel retail prices in 2008 will average $4.18 per gallon, up from $2.88 per gallon in 2007.