Dive Brief:
- California diesel on-highway average prices statewide have been retreating in recent weeks, but smaller carriers are still bearing the brunt of these operating challenges, California Trucking Association President Tim Pollock told Trucking Dive on Monday.
- Diesel prices in the state increased to $8.09 per gallon Monday on average, a 1-cent uptick versus a week ago, the Energy Information Administration reported. Recent weeks in September had the Golden State’s average peak around $8.25 per gallon, based on data captured at the start of the week.
- “It definitely is a tremendous impact here in our industry,” Pollock said, noting fuel is one of the largest expenses in general even before prices soared in Q1 and again in Q3 to unprecedented highs.
Dive Insight:
Small carriers can lack the upfront cost to cover costs before fuel surcharges kick in, and even then, surcharges might only cover some 70% or 75% of the costs, said Pollock, who is also the VP of CPS Express.
“We primarily service all of California with our trucks, but we do send trucks over to Arizona or Las Vegas, and so when we get our trucks out of state, we encourage them to fill up,” he said.
Nevertheless, smaller carriers see the price surges more because they can lack the upfront cost to cover fuel costs.
Last week, the Trump administration ordered dyed diesel, traditionally used for off-road agriculture vehicles, to expand to on-road use. The order seeks to defer taxes for the remainder of the year, but trucking groups suggested the measure doesn’t address market fundamentals.
The dyed-diesel provision means little to California, which restricts the use of such tax-free fuel on public roads anyway, the California Farm Bureau said Friday in an online newsletter. If California also removed its state tax on diesel, that could save businesses 73 cents per gallon, the bureau said.
Freight and supply chain groups including the California Trucking Association reached out to Gov. Gavin Newsom earlier this month, calling on the state government to help.
“Everything can help,” Pollock said. “At the end of the day, somebody's got to pay for this cost.”
Diesel costs have skyrocketed as the Iran war has interrupted key trade routes and infrastructure. Dozens of refineries and energy sites have been damaged amid the attacks, according to news reports.
Such damage could take months to reverse, or even longer if rebuilding from scratch, according to Matt Kropf, associate professor of engineering technology and director of the Harry Halloran Energy Institute at the University of Pittsburgh at Bradford.
“I personally expect that we would see elevated diesel prices well into 2027, and I base that just on the type of refining capacity equipment that needs to be repaired, rebuilt, replaced, that that has suffered damage through international conflicts,” he said.
President Donald Trump also said that he was seeking to secure installments of diesel from Russia, according to a post on Truth Social. Diesel pressure is even worse in Europe amid the war between Russia and Ukraine, the Federal Reserve Bank of Dallas noted last week.
