What is going on with diesel fuel prices? Let me try and give you my 2 cents but please don’t shoot the messenger.
I am sure you have all been reading or hearing about why the price of crude oil is over $100 and could go a lot higher. This has caused diesel fuel prices and gas prices headed well over $4 a gallon in some parts of the country. We hear the same things and honesty don’t know where the price of fuel will go.
Following the crude oil market everyday and trying to determine which way it is going to go, is like picking a stock like Apple (AAPL) that traded on January 29, 2010 at $190.25 and closed the year in 2010 at $330.20. Great deal if you picked it, but connecting the dots backwards is always easier than connecting them forward.
I wrote that passage above in January 2011. A little more than a year has gone by since then and crude oil has played around from $80 to $115 a barrel. Apple (AAPL) is over $600. Did you buy it? I didn’t boy do a feel like a knucklehead. Apple great products, everyone loves them. Ok, I will forget that retirement isn’t going to happen early because I am not a predictor of the future. Back to diesel fuel prices and getting people some fuel savings.
Here is our view and I will be the first one to tell you that it has changed over the past 2 weeks. I think the big run up is over. Yes, over for right now. Your diesel fuel prices and gas prices will still have some creep to them but we are looking at a great run. Great runs are created because you have an excellent product like Apple or a supply and demand issue. I don’t think we have either right now. Of course that can change before I finish this article.
What we have is a FEAR, FEAR, FEAR problem. The more something is talked about and we worry about it. Traders worry about it. Everyone that uses oil in anyway worries about it; it provides a sense of fear. As fear increases false demand happens.
Take this line below that was written in the paper about oil prices.
“China is trying to control its inflation but oil consumption is expected to increase by 5% there in 2012 over record 2010 numbers. Precious metals continue to trade higher because of China’s demand and other growing countries. U.S. gas demand has been flat the last couple of years but diesel fuel has continued to grow even in a slower economy.”
True statements but are they relative with today. We get data every day about the housing market, unemployment, job growth you name it there is a report for it. I actually believe there are probably too many reports. It reminds me of a trucking fleet operations fuel program. A salesperson from a fuel card company goes in and says, you will be able to get this report and that report. We will provide all of this data to you. You will have fuel saving because you have all of this data. True be told, you want data but use the old KISS method. Keep It Simple Stupid. The more fueling data or any kind of data you give someone, the more likely you are to paralyze them. Could you image you go to buy a new car and it comes in 32 different colors and 9 different styles. Your head would hurt and you would leave.
Drum roll please. Diesel fuel prices and gas prices will take about the same direction. Gas prices nationally won’t go above $4.15 a gallon and diesel fuel prices won’t go above $4.35 a gallon. Not cheap fuel by no means but not $5.00 either. As we work through the summer, fuel prices will actually begin to drop about 25-35 cents for gas and 20 cents for diesel fuel. The late fall will lead to a whole other set of issues. Way too far in the future for this fuel management solutions person to predict at this point.
My view on most things is preparing for the worst and hope for the best.
Confused? No problem. Head to an ice cream store with 32 flavors after you haven’t eaten in a day.