Truckers live and die by diesel prices. If the price is low, drivers can fill up their tank and still have enough cash leftover to pocket. If its high, however, truckers are forced to cut into their personal bank accounts to fill up their tank.
Company owners get in particularly sticky situations when diesel prices rise. If the prices climb too much, owners must give their drivers money originally assigned to be spent on other things. Company owners being forced to spend money they don’t have for gas often leads to cash flow problems, which cause quite a few issues in the business’ overall operating schedule.
Everything You Need to Know About Rising Diesel Prices – How to Avoid Pain at the Pump
What Affects the Cost of Diesel?
U.S. Energy Information Administration has narrowed down four aspects that directly contribute to the price of a gallon of diesel.
- The cost of crude oil purchased by refineries.
Diesel is made from crude oil. If the cost of crude oil rises, so will the price of diesel. For example, if the Gulf Coast gets hit with a hurricane, a lot of crude oil refineries will be damaged and the price of crude oil to skyrocket. In turn, the price of diesel will go up as well.
- Refining costs and profits.
Refining is the process of making diesel fuel out of crude oil. If it costs more money to produce diesel in the summer, refineries have to charge more money per gallon of gas.
- Distribution, marketing and retail station costs and profits.
If the refinery is upping the price of diesel, so will the gas stations that purchase it. Then they’ll have to increase the price that you pay so they can also make a profit.
- Federal, State, County and local government taxes.
There’s a reason why the diesel prices vary in different locations. California diesel may be more expensive than diesel in Oklahoma due to the varying taxes gas stations have to pay to stay open in each state or county.
The Seasonal Costs of Diesel
The season also affects the cost of diesel. Most refineries are located near to or in the ocean. In the summer and fall, coastlines often get bombarded with hurricanes. Refineries usually get damaged and must pay millions of dollars to repair their operation. Since the supply was cut, but the demand remains steady, diesel prices go up.
According to data gathered by the Energy Information Administration, diesel prices have only gone up as time goes on. Diesel prices tend to dip between June and September, raising in price during the winter months in particular.
How Much Will Diesel Cost in the Future?
The EIA predicts that 4 million barrels of diesel fuel will be used each day in the summer of 2018 – 100,000 more barrels per day than what was used in summer of 2017. The administration projects diesel to average around $2.92 per gallon, up from $2.59/gal the year prior.
They’re estimating that oil production, from the U.S. in particular, will increase at least another 4 percent by the end of September. This could potentially lead to a higher demand for fuel, which means a higher price at the pump.
Although the price of fuel has been lower than peak price levels in 2008 – when the average gallon of diesel was $4.11 in August – it is still continuously rising. Diesel prices across the United States are up .57 cents compared to last year.
Diesel hit its lowest price in 2016, with the average price per gallon being as low as $2.34. It went up the next year by .35 cents and is projected to rise as time goes on.
How to Combat Rising Diesel Prices
Find the least expensive fuel near you.
Finding the least expensive diesel is as simple as typing “diesel near me” into your search engine. There are also a variety of apps that can be downloaded to your smartphone designed to show you the price of gas relative to your location.
GasBuddy is an app designed for browsing gas prices. It will show you the prices of fuel within a certain adjustable radius. It’s crowdsourced, so you can count on the prices being updated in a timely manner. Every time a person informs GasBuddy of the price at a certain pump, they get entered to win a weekly $100 gas card.
For those who want an app that does everything, use Waze. It doesn’t offer an incentive for reporting diesel prices, but you do get special “Waze-only” deals from partners.
It might not seem worth the effort to find diesel that is a few cents cheaper, but if you’re filling up a large tank often, the savings will start to add up.
Learn to drive in a way that conserves fuel! Fueling up less equals more money in your pocket. Cut down on the time you spend idling in traffic by planning your routes ahead of time. Try not to get stuck in standstill traffic or areas where you are constantly hitting the gas and then braking – both of these situations cause your engines to work extra hard for little to no reward.
Utilize fuel advances.
Fuel advances can be a truck driver’s best friend! They provide the funding needed to cover the cost of diesel when you pick up a load, instead of when the load is delivered.
What is a Fuel Advance?
A fuel advance is a financial solution offered to truck drivers and trucking company owners through certain freight factoring programs. When you choose a factoring company that offers fuel advances, you can receive between 40 to 50 percent of your invoice amount when the load is picked up.
How do Fuel Advances Work?
- Pick up the load.
- Send a copy of documentation to the factor. Factoring companies normally ask for copies of your rate confirmation and Bill of Lading.
- The factoring company confirms the load has been picked up.
- Receive a 40 to 50 percent fuel advance instantly.
Do I Qualify For a Fuel Advance?
What is Freight Factoring?
Freight factoring is when trucking companies sell freight invoices at a discount to factoring companies for immediate cash. The freight factoring company collects payments from the trucking company’s customers.
Do I Qualify For Factoring?
If your company has active invoices, give us a call or fill out an online form. We can set you up with a freight factoring company that can work around your company’s specific wants and needs. Don’t worry about your credit, either. Freight factoring companies collect payment from your customers, so truckers with poor credit are still eligible for factoring.