Whether to 'Lock in' Diesel Prices

Analysts were divided on whether fleet managers should “lock in” at current prices as the national average cost of diesel fuel rose to $1.137 a gallon last week.

The July 26 average represented an increase of 0.4 cent from the previous week’s $1.133, but it was the smallest rise since the steady climb began seven weeks ago, according to the Department of Energy. The run-up that started June 7 now totals 7.8 cents a gallon and has triggered surcharges in published less-than-truckload rates and truckload contracts of some companies. Other carriers have not imposed surcharges (7-26, p. 1).

Whether trucking companies should load up on diesel at the present price or risk continued hikes is open to debate among analysts.

Tom Kloza of the Oil Price Information Service thinks carriers should lock in. Joining him in agreement are Bob Costello of the Economics and Statistical Analysis Department at American Trucking Associations and Mark Derks of T-Chek.

Bucking their suggestion is Randall Nottingham with Standard & Poor’s DRI Energy Consulting Group.

Kloza, editorial director at the research firm based in Rockville, Md., said he thinks prices will fluctuate through early fall “within a range of about a nickel.” But he said “all bets are off” in predicting fuel costs in the fourth quarter of 1999 and the first quarter of 2000.

For the full story, see the August 2 print edition of Transport Topics. Subscribe today.