Diesel fuel prices soaring

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Diesel fuel prices soaring
Tuesday, February 8, 2000

By KEVIN G. DeMARRAIS
Staff Writer

Jonathan Blonde has no choice but to pay the ever increasing price for diesel fuel.

Blonde owns an office furniture distribution company, and without fuel, his trucks would remain idle and he'd be out of business.

As drivers of diesel-powered cars and trucks have been shocked to discover, fuel prices have nearly doubled in recent weeks. Cold weather and limited inventories are keeping supply below demand.

The result: The price of diesel fuel, which was just over $1 a gallon in January, shot up by as much as 50 cents a gallon within a 48-hour period late last week to break the $2-a-gallon barrier for the first time, even forcing some gas stations to put a hand-written "2" over the first digit on price signs.

The surge continued Monday, with diesel fuel topping $2.30 at some stations and the average reaching $2.13 a gallon in North Jersey, according to The Record's Marketbasket Survey. South Jersey prices are a bit lower, so the statewide average was $2.07 a gallon -- more than double the 99.6 cents diesel fetched a year ago -- the Lakewood-based Oil Price Information Service reported.

"It's scary," said Blonde, the owner of Prestige Office Furniture in Carlstadt. Providing free delivery to customers, and keeping as many as six trucks on the road daily, has become increasingly expensive.

In November, when diesel fuel cost him $1.17 a gallon, it accounted for 10 percent of his expenses, Blonde said. Now, paying $2.30 a gallon, it's up to 20 percent.

"I've been in the business for 33 years, and I've never seen diesel go the way it is," Blonde said. "This is ridiculous."

Blame it on OPEC, the cold weather, and supply disruptions, said Jim Benton, executive director of the New Jersey Petroleum Council, a Trenton-based trade organization.

Those are the same reasons industry officials cited when home heating oil prices began to soar about three weeks ago, and that is not a coincidence, because heating oil and diesel fuel are essentially the same product, Benton said.

But keeping furnaces hot takes precedence over keeping trucks on the road, so "the marketplace priority has gone to heating oil," Benton said.

Fortunately, there is an end in sight, said Tom Kloza, chief oil analyst at the Oil Price Information Service. "The chaos seems a little more orderly. "My guess is that these numbers will represent the all-time high. There were big drops in the spot market today [Monday]. Prices seem to be easing."

A key will be whether the Organization of Petroleum Exporting Countries increases production in the late spring, which would bring prices back to a more manageable level.

In a study released Monday, researchers from Arthur Andersen and Cambridge Energy Research Associates said oil prices are likely to drop in the coming months as OPEC gauges what the world can afford.

"OPEC and key non-OPEC producers are keenly aware of the risks of prices rising too much as well as the risks of prices tumbling down toward single digits once again," said the report, titled "World Oil Trends 2000."

Producing nations want to strike a balance between robust prices and affordable oil that won't break energy-dependent countries, particularly Far East nations emerging from economic crises, said Joseph Stanislaw, Cambridge Energy's president.

Lower prices can't come soon enough for people like Sandy Segura of Hackensack, who has left her 15-year-old Mercedes-Benz parked in the driveway.

Diesel-powered cars accounted for a mere 0.2 percent of the 1.2 million cars and light trucks sold in January, said Bill Seltenheim of Autodata Corp. of Woodcliff Lake.

With diesel over $2 a gallon, "I'm literally not using my car," Segura said.

The price of diesel fuel and gasoline has traditionally been close. But this winter, even as gas prices have soared more than 30 percent above their 1999 levels to almost $1.30 a gallon, they are more than 80 cents below diesel prices.

For Blonde and other small truckers, such as Gustavo Solorzano of Newark and Cecil Harris of Boonton, the price increases come directly out of their pockets.

"It's outrageous; it's killing us," said Harris, who is on the road 14 hours a day providing road service to trucks throughout North Jersey. To do so, he fills his 22-gallon tank at least once a day. On Monday, that cost him $1.89 a gallon at a Moonachie Sunoco station.

Harris said he pays for fuel out of the $50 an hour he is paid no matter what the cost of diesel.

Solorzano, who delivers merchandise for a Carlstadt company, has a similar problem. His contracts set payments by the weight of the merchandise, not his expenses, so he is forced to eat the higher prices.

When you drive 800 to 900 miles a week, and your truck gets a mere 8 to 9 miles per gallon, the extra costs add up quickly, Solorzano said. "I'm scared now."

Station owners and attendants bear the brunt of the criticism, but they have no control over the runaway prices, said Gurjinder Singh, who was pumping fuel at a Getty station on Route 17 in Paramus.

Diesel was $1.99 on Friday, but he had to raise the price to $2.09 Saturday and to $2.19 Monday after receiving calls from Getty officials. "The people get upset," Singh said.

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-- Maher Shalalhashbaz (mahershalalhasshbaz@mail.com), February 09, 2000

Answers

Diesel fuel up 130% since January has nothing to do with y2k. Just shut the f* up and keep pouring your hard earned money into that 401k.

-- (@ .), February 09, 2000.

Don't pour it too quickly though. I'd like those stock prices to go down some more, before I jump in and make a killing on the way up.

Some people do seem to cling to the idea that there will be a catastrophic y2k-induced oil crisis that will bring the world to its knees. Prices are actually going down is some parts of the world. Get over it!

-- (agreed@no.problem), February 09, 2000.


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