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WINTER | TCA 2017
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Tracking The Trends
Coasting into 2017
Experts forecast only moderate increase in fuel costs in 2017
Despite increasing energy prices, the first concerted
OPEC production cuts in years and the recent
crash in U.S. energy production, trucking can look to
2017 fuel expenses without undue anxiety.
That’s the opinion of several experts in the field and
the U.S. Energy Information Administration (EIA), whose
forecasts call for moderately higher oil prices in 2017,
which translates to $2.83 per gallon of diesel by December,
an increase of 9.3 percent for the year.
David Heller, vice president of government affairs at
the Truckload Carriers Association, agreed that the trucking
industry’s fuel price expectation for 2017 remained
stable.
“I haven’t heard anything on a fuel shortage,” he said,
“nothing overly aggressive in terms of a price rise.”
“[Price rises] can vary regionally,” said Timothy
Hess, a petroleum expert at EIA specializing in diesel.
“We’re expecting crude oil prices to get higher
this year. In 2016 crude oil averaged in the low $40-
per-barrel range. This year should be [in the $50
range], somewhere around $10 a barrel [higher].
Also, the refining margins are expected to go up a bit.
Diesel demand is expected to be higher this year. We’re
seeing crude oil and natural gas production increase.
Coal production is supposed to be a little higher. Last
year coal declined, which hurt retail prices. You basically
have more diesel fuel consumption chasing the same
amount of supply.”
A key reason for the upturn in oil prices, aside from the
pumping halts affecting many domestic wells, is the decision
by Saudi Arabia, followed by other members of the
Oil Producing Exporting Countries (OPEC) cartel, to reduce
oil production. At a meeting of OPEC countries November
30, 2016, members agreed to reduce production by approximately
1.2 million barrels per day from an October
baseline and to lower OPEC’s production ceiling to 32.5
million barrels per day beginning January 1 and lasting six
months. The agreement contains an option to extend the
production cuts for an additional six months.
In EIA’s December Short-Term Energy Outlook (STEO),
both the West Texas Intermediate (WTI) and Brent crude
oil 2017 price forecasts increased by about $1 per barrel
from the November STEO. The forecast includes consideration
of the OPEC cuts, but the lowered production targets
only resulted in small changes to the STEO forecast, EIA
stated.
The oil price increase that followed the OPEC supply
reduction has already eased somewhat, according to Jim
Patterson of Kiplinger.com.
“Benchmark West Texas Intermediate is right
around the level we expect it to trade at in coming
months,” Patterson wrote this past December
20, “aside from some inevitable
dips and spikes that probably
won’t last long.”
TCA 2017 www.Truckload.org | Truckload Authority 15