Diesel Adds to Record High, Hitting $5.25 a Gallon
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The national average price of diesel recorded its second dramatic spike in as many weeks, this time 40.1 cents to reach $5.25 a gallon, according to Energy Information Administration data released March 14.
Trucking’s main fuel has surged $1.146 in just the past two weeks.
The cost of a gallon of diesel rose in all 10 regions in EIA’s weekly survey, with the steepest increase being in California. The 50.5-cent surge there sent the price to $6.264 a gallon — the highest in the country.
U.S. average on-highway #diesel fuel price on March 14, 2022 was $5.250/gal, UP 40.1¢/gallon from 3/07/22, UP $2.059/gallon from year ago https://t.co/8yGrji5JYd #truckers #shippers #fuelprices pic.twitter.com/piV00jmWwU — EIA (@EIAgov) March 15, 2022
Diesel’s price registered its second consecutive all-time high. Prior to March 7, the record price for a gallon of the fuel was $4.764 in July 2008. A gallon of diesel costs $2.059 more than it did at this time in 2021.
The national average price for gasoline also took a big leap, increasing 21.3 cents a gallon to reach $4.315, which is $1.462 more than a year ago. On the West Coast, gas averages $5.155 a gallon.
As the price of diesel soars, some trucking companies are expressing concern about what the spring and summer of 2022 may foretell in terms of increases they will pay at the depots to keep their rigs running.
Wettstein
“We’re watching it pretty closely,” Nussbaum Transportation Chief Financial Officer Bill Wettstein told Transport Topics. “We’re sending out emails a couple of times a week to our teams, and we’re making sure that all of our freight has an acceptable fuel surcharge to it or we are reviewing those rates and contacts on a regular basis.”
The Hudson, Ill., carrier operates 490 trucks, and the company says it has some flexibility on rates because 15% of its business is on the spot market. The company also is instructing its staff when it comes to that freight to increase its rates to make up the difference for the rising cost of fuel.
Nussbaum also is an active member of the North American Council for Freight Efficiency, which conducts regular programs to encourage fleets to improve their fuel consumption by working with drivers to improve their skills, idling less and keeping equipment in top condition.
“The maintenance and operations teams are hitting it pretty hard regarding efficiency,” Wettstein said, pointing out that behind salaries and benefits, fuel is the company’s second-biggest cost center, accounting for 14% of its monthly spending.
On-Highway Diesel Fuel Prices
EIA.gov
As prices soar, governors and legislatures coast to coast are considering measures to temporarily suspend their state fuel taxes to provide relief to consumers for up to a year, as is the case where a proposal is under review that would roll back Virginia’s fuel tax for 365 days. California’s Legislature turned down a Republican plan to cut the state’s 51-cents-per-gallon fuel tax, but Gov. Gavin Newsom is proposing his own fuel tax rebate, which is likely to be approved.
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“No one’s naive about the moment we’re living in, with high gas prices and the geopolitical uncertainty fueling them,” Newsom told state legislators.
Maryland Gov. Larry Hogan and lawmakers in Annapolis are the latest to consider an emergency fuel tax suspension to combat rising prices. The proposal would put on hold the state’s 37-cents-per-gallon diesel and gasoline tax for 30 days.
Critics of the legislation, on the state and federal level, say suspending the fuel tax could hurt efforts to rebuild the country’s crumbling infrastructure. But supporters say with many states running record budget surpluses, including Maryland with $7.8 billion available in the bank, it’s time to provide hard-hit consumers with some relief. Similar measures are under consideration in at least 17 other states. Florida is considering a 30-day suspension and would make up the estimated $200 million in lost fuel taxes by tapping into $200 million it has available in unused COVID-19 relief money.
Sens. Mark Kelly and Maggie Hassan
It’s unclear if a similar federal proposal will pass Congress. Two Democratic Senators, Mark Kelly of Arizona and Maggie Hassan of New Hampshire, have introduced a bill to suspend the 18.4-cents-per gallon gas tax until 2023.
With the Biden administration’s announcement of a cutoff of Russian oil imports because of Moscow’s invasion of Ukraine, worldwide oil prices appear to be stabilizing after a roller coaster week that saw the West Texas Intermediate benchmark hit its highest level in 14 years. On March 14, WTI fell nearly 9% to close just below $100 a barrel after reaching $130.50 earlier in the month.
Meanwhile, even as some oil producers say they won’t begin wide-scale drilling because of the uncertain price of crude, domestic production — especially in oil-rich West Texas, eastern New Mexico, Pennsylvania and North Dakota — is surging.
The latest Baker-Hughes rig count March 12 showed 663 active rigs in the U.S., up 13 in just the past week and up 261 from year ago.
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