Diesel Price Soars—Up 20.9 Cents After 9-Week Decline
For the week ending August 29, the U.S. average price of diesel rose 20.6 cents to $5.515 per gallon. According to the U.S. Energy Information Administration (EIA), this price was $1.776 above the same time last year and marked the first time since August 1 the price has been above $5 per gallon.
This increase follows 9 consecutive weeks of diesel price declines of at least 10 cents per week. From June 27 to August 22, the U.S. average diesel price dropped by 87.4 cents a gallon. In the Midwest, the key grain-producing region, the diesel price showed the largest jump of 28.2 cents to $5.172 per gallon.
The increase reflected regional supply concerns after an August 24 fire at the BP refinery in Whiting, IN, resulted in an emergency shutdown of the facility. Within 2 to 3 days, BP plans to restore power to a repaired electrical system at the 435,000-barrel-per-day refinery.
FMCSA and EPA Issue Hours-of-Service and Fuel Waivers in Midwest
On August 27, the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) issued a temporary hoursof- service (HOS) exemption for motor carriers and drivers transporting fuel and other refined petroleum products to Illinois, Indiana, Michigan, and Wisconsin. The waiver was issued to ensure the supply of gasoline, diesel, and jet fuel to these four States after the emergency shutdown of the BP refinery in Whiting, IN.
The waiver will remain in effect until 11:59 p.m. Eastern Time on September. 10, or until the end of the emergency. On August 27, the U.S. Environmental Protection Agency (EPA) also issued an emergency fuel waiver to help alleviate fuel shortages in the affected States. Valid through September 15, the waiver applies to State Implementation Plan requirements regulating the volatility of gasoline sold in Illinois, Indiana, Michigan, and Wisconsin. The waiver is intended to facilitate the supply of fuel in these States.
Three Labor Unions Reach Tentative Agreement With Rail Carriers
On August 29, three labor unions, representing approximately 15,000 railroad workers, reached a tentative agreement with the railroads that now goes to labor members for their ratification. Nine other unions, representing approximately 130,000 workers, have yet to reach an agreement. The negotiations began in 2020.
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After mediation with the National Mediation Board failed earlier this year, President Biden initiated a Presidential Emergency Board (PEB) to provide recommendations to help the parties come to a resolution. The PEB recommendations were released on August 16, which started a mandatory 30-day cooling-off period.
If the railroads and unions have not reached agreement by September 16, the Railway Labor Act allows the parties to enter a “self-help” period, which allows for actions such as strikes and lock outs.
FHWA Invests $10 Million To Reduce Highway and Port Congestion
Under its Advanced Transportation and Congestion Management Technologies Deployment program, the Federal Highway Administration (FHWA) has awarded nearly $10 million for trucking-related projects in California and Kansas. On U.S. 83, a two-lane corridor critical to freight transport in Kansas, a $6.7 million grant will help install 100 miles of fiber-optic cable and advanced technologies.
The technologies will provide traffic, weather, and other information to optimize truck-freight routing and improve economic productivity. At the Port of Los Angeles’s Gateway project, a $3 million FHWA grant will help implement cloud-based artificial intelligence (AI) to streamline the staging of cargo and empty returns. The AI application introduces a new approach to reducing port congestion by helping to direct cargo owners, truckers, and drayage drivers.
Snapshots by Sector
For the week ending August 18, export sales data are unavailable as the USDA’s Foreign Agricultural Service has not yet published the weekly export sales report.
U.S. Class I railroads originated 20,958 grain carloads during the week ending August 20. This was a 2-percent decrease from the previous week, 15 percent more than last year, and 4 percent more than the 3-year average.
Average September shuttle secondary railcar bids/offers (per car) were $83 above tariff for the week ending August 25. This was $401 less than last week and $98 more than this week last year.
For the week ending August 27, barged grain movements totaled 345,840 tons. This was 4 percent lower than the previous week and 19 percent greater than the same period last year.
For the week ending August 27, 235 grain barges moved down river—15 more barges than last week. There were 513 grain barges unloaded in the New Orleans region, 21 percent fewer than last week.
For the week ending August 25, 19 oceangoing grain vessels were loaded in the Gulf—10 percent fewer than the same period last year. Within the next 10 days (starting August 26), 28 vessels were expected to be loaded—18 percent fewer than the same period last year.
As of August 25, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $61.50. This was 2 percent less than the previous week. The rate from the Pacific Northwest to Japan was $35.50 per mt, 3 percent less than the previous week.