While most metro Atlanta drivers have been cruising downhill, enjoying a steady and smooth drop in the price of gasoline, anyone who runs a rig on diesel has been chugging along in a much steeper lane.
Prices for both have fallen since the painful peaks of June, but gas prices now are below their levels of a year ago, while diesel still costs about $1 a gallon more.
Some of the impact at the pump flows downstream, since many trucking companies have fuel surcharges built into their contracts, compelling customers to pick up at least part of the tab, said Chris Arnone, a partner at Atlanta-based accounting and advisory firm Moore Colson.
“Whoever is paying for transportation costs is paying more right now,” he said. “Ultimately, much of that is being passed on to consumers in the price of food and retail.”
Sandy Springs-based UPS, which delivers tens of millions of parcels each day with one of the world’s largest trucking fleets, has surcharges based on weekly reports on fuel prices by Energy Information Administration.
But surcharges are not large enough to make up for the price spikes for many carriers, especially smaller ones with less negotiating power, said Kathryn Stewart, owner of Lawrenceville-based Performance Trucking, which has a fleet of 110 trucks.
“A surcharge is designed to handle these kind of issues, but that said, it’s never as much as we actually spend,” she said. “It won’t put us out of business; we can manage it, but it has put a significant dent in our profits.”
The company tries to buy fuel where it’s cheapest and to limit the trips trucks take without a shipment — since there’s no reimbursement, Stewart said. “We just try to reduce cost in every way possible.”
And when surcharges do get passed to retailers, they have to decide how much they can absorb and how much higher they can nudge their own prices.
Georgia Furniture Mart faces higher costs from most vendors and suppliers, said Robin Hopper-Graham, vice president of the Norcross-based company. “Most of our vendors and suppliers implemented fuel surcharges ranging from 5-15% on every order over the past 18 months.”
JOHN SPINK / AJC
JOHN SPINK / AJC
Inevitably, some of the cost is passed along in higher prices to customers, she said. “We didn’t however pass on the entire charge because we want furniture to our customers to be as affordable as possible.”
Some solo drivers and businesses may not be able to add any surcharge at all.
Spencer Schlampp, owner of Schlampp Landscape in Dallas, Georgia, uses about 10 trucks. The price of diesel hurts each time one of those vehicles has to fill its tank. “It used to cost $100 to $150 per truck trip and it’s now $300 to $350,” he said.
Rates for current customers are locked in, and while he charges more for new ones, it’s not a great way to attract clients.
“For my landscaping business, it has added $1,000 to $2,000 a week,” Schlampp said. “Gross sales are up about 25%, even though our profits are down about 20%. But you have to adapt to what the new normal is.”
For companies and consumers alike, the cost of fuel is like a tax on activity, adding to the expense of shipping, travel and commuting, as well as manufacturing. And for the overall economy, the cost of fuel is a headwind, a burden that can slow growth, hamper hiring, raise prices and — if that cost stays high long enough — sweep the nation into a recession.
Because higher fuel costs nibble at paychecks, chew up savings and take a bite out of profits, they nudge companies and consumers toward lower-cost alternatives or simply doing less.
A year ago, national diesel prices averaged $3.63 a gallon, while gas prices averaged $3.40.
Everyone’s prices soared over the next few months as a rebounding U.S. economy demanded ever-more fuel, the Russian invasion of Ukraine siphoned oil from the market and speculators bid up prices on the bet that there wouldn’t be enough energy to go around.
In June, gas prices hit an all-time high in Atlanta, averaging $4.54 for a gallon of regular while diesel prices averaged $5.81.
But demand leveled off, production picked up and the market started to adjust.
Since that June peak, the pump price of gas in Atlanta has come down 37% — while diesel has only come down about half as much.
By late December, metro Atlanta drivers were paying an average of $1.83 a gallon less for gasoline than they had in mid-June. The price of gas was averaging 43 cents a gallon less than it had been in late 2021 in the months before the Russian attack.
But diesel stayed stubbornly expensive through the fall, and a mix of factors is responsible, experts say.
Diesel is made from the part of oil that is also used for jet fuel, kerosene and home heating oil, so higher use of those products makes diesel scarcer and more costly. Moreover, because European vehicles typically use more diesel, there’s more global competition for it.
Progress came in recent weeks, with U.S. refineries running at 95% capacity, according to the Energy Information Administration. As they poured out more diesel, that rising supply sent diesel prices plunging. Prices fell from $5.31 a gallon in mid-November to $4.60 by Christmas week.
Even so, it pays for a trucker to shop around.
This week, there were at least eight metro Atlanta stations still charging more than $5 a gallon for diesel, some up to $5.49 a gallon, according to Gas Buddy, which tracks fuel prices nationwide. In contrast, about a dozen area stations were charging less than $4.20, including a Tucker Shell at $3.74 a gallon.
Pump prices
Average diesel* price per gallon
Year ago: $3.63
June: $5.81
Recent: $4.60
How much more costly is a gallon of diesel than gas*
Year ago: 23 cents
June: 80 cents
Recent: $1.48
*National average for both diesel and gasoline
Source: Energy Information Administration, Gas Buddy
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