Chart of the Week: Diesel Truck Stop Price per Gallon, Dept of Energy average weekly price of diesel, Utlra-low Sulpur Diesel Rack Price, Retail to Wholesale Fuel Spread – USA SONAR: DTS.USA, DOE.USA, ULSDR.USA, FUELS.USA
Wholesale diesel prices (ULSDR, light green) jumped more than 30% last week, while retail prices (DTS daily in white and DOE weekly in yellow) increased by more than 14%. The velocity of these price changes may be more impactful than the absolute cost, which as of Friday remained below historical highs. While shippers will undoubtedly feel the pain of rising transportation costs, carriers will also face pressure from the underlying wholesale, or rack, price increases.
Fuel typically accounts for roughly 20–25% of the total cost of truckload transportation, though this share can fluctuate depending on how expensive or cheap fuel becomes. From a shipper’s perspective, rapid increases in fuel prices can wreak havoc on budgets. For carriers, fuel is a critical component of operating expenses that must be actively managed.
The latest disruption in the oil market is the most significant since Russia’s invasion of Ukraine in early 2022. It is also the first large-scale disruption since OPEC voluntarily constrained supply in the summer of 2023. That event proved relatively short-lived, as prices moderated later that fall.
For most trucking carriers, fuel is largely a pass-through cost, typically recovered through a fuel surcharge tied to the weekly average diesel price published each Monday by the DOE. Most fuel surcharge tables assume a fuel efficiency of roughly 6.5 to 7 miles per gallon. There is also usually a fixed amount of fuel embedded in the base transportation rate, which generally covers the cost of fuel up to about $1.00 to $1.50 per gallon. As a result, most surcharge tables begin around this level and increase incrementally as diesel prices rise.
Many large fleets have purchasing agreements with fuel suppliers that allow them to buy fuel in bulk at or slightly above the wholesale price. While this may appear to be an arbitrage opportunity on the surface, many carriers use this spread to offer more competitive pricing when the market is balanced and capacity is relatively loose—as has largely been the case over the past three years.
When wholesale prices rise faster than the average retail price, it compresses the buffer created by the spread between retail and wholesale diesel—labeled FUELS in orange on the chart. The smaller this spread becomes, the less flexibility carriers have to pass fuel costs through effectively. When prices ease, the opposite occurs. Recently, this spread has shrunk from around $1.02 to $0.68 per gallon.
