Diesel Prices Surge 30% Wholesale, Straining Carrier Margins

Why It Matters Wholesale diesel prices jumped more than 30% last week while retail prices climbed 14%, marking the most significant oil market disruption since Russia's 2022 invasion of Ukraine. The speed of these increases may prove more challenging than the absolute cost itself, which remains below historical highs. Key Details Fuel typically represents 20-25% of total truckload transportation costs. For carriers, most fuel expenses are pass-through costs recovered through fuel surcharges tied to the weekly DOE diesel average published each Monday. Standard surcharge tables assume 6.5 to 7 miles per gallon efficiency. The Compression Problem When wholesale prices rise faster than retail averages, the spread between them narrows significantly. This compression reduces the buffer carriers use to maintain pricing flexibility and manage fuel cost volatility. Large fleets with bulk purchasing agreements at or near wholesale prices face particular pressure. What's Next Many carriers have used the retail-wholesale spread to offer competitive pricing during the recent loose capacity market. A tightening margin limits this strategy. Industry observers will watch whether this disruption proves temporary like the 2023 OPEC supply constraint or signals sustained volatility ahead.