Diesel Prices: Up, Down, or Stuck?

FreightWaves editor-at-large John Kingston breaks down the latest diesel price trends and the bombshell $700M nuclear verdict against CH Robinson. Discover what this ruling means for freight brokers and the entire trucking industry, plus insights into fuel price outlook for the coming winter.

A Dallas County judge has affirmed 100% of the roughly $603 million nuclear verdict against C.H. Robinson in the Lippe v. Lupus Superior case, and tacked on approximately $100 million in accrued interest, bringing the total judgment to around $700 million — a figure that continues to grow daily at a rate above 6%, according to FreightWaves editor-at-large John Kingston.

The case stems from a fatal accident in which a Lupus Superior driver — hauling a beverage load brokered by C.H. Robinson — was killed along with two other people. The jury verdict in Dallas County found C.H. Robinson liable, with the judge’s ruling going further by treating the driver as effectively an employee of the broker. That holding is what Kingston says makes the case far more consequential than a single large verdict.

“If you get a network of findings between this and the Penske case, that the broker at the top of the chain that started that cargo from going down is now liable for what happens 2, 3 levels below that broker, the impact of that is just going to be massive,” Kingston said.

C.H. Robinson faces a difficult strategic decision: settle and absorb a massive payout, or pursue appeals while interest compounds. Kingston noted the company holds roughly $150 million in cash and carries an investment-grade credit rating it is unlikely to put at risk. The broker has already announced plans to raise new debt to fund its pending acquisition of RXO — a deal announced roughly two to three weeks ago. Kingston said he believes C.H. Robinson gamed out the Lippe verdict scenario before proceeding with the RXO deal. The company reports earnings on October 28, with a conference call at 5 p.m., and Kingston said that call will be the most closely watched of the season.

On diesel, the Department of Energy’s weekly benchmark — the basis for most fuel surcharges — rose 9.7 cents this week to $6.276 per gallon, reversing three consecutive weeks of declines. The record high of roughly $6.52 was set about three weeks ago. Kingston described the current price environment as “stuck,” with Brent crude above $100 but well short of the $150 worst-case scenarios floated earlier this year. He said low distillate inventories and approaching winter heating-oil demand leave little room for prices to fall.

“I don’t really see a case for a decrease. I see a case going into winter for an increase,” Kingston said, adding that a mild El Niño winter in the Northeast — the largest U.S. heating oil market — could limit some upside pressure on distillate supplies.

Kingston also highlighted the American Transportation Research Institute’s annual survey, in which fuel prices ranked as the No. 1 concern overall and the top issue for drivers in 2023 — the first time fuel has appeared on the ATRI list in at least two years. ATRI has conducted the survey for 22 years, and Kingston noted that fuel prices either don’t appear on the list or land at No. 1 — there is no middle ground. Truck parking ranked No. 2 among drivers but did not appear on carriers’ list at all, illustrating a persistent disconnect between the two groups.

• Dallas County judge affirmed the full ~$603M verdict against C.H. Robinson plus ~$100M in interest, bringing total liability to ~$700M and growing at 6%-plus daily
• DOE diesel benchmark rose 9.7 cents to $6.276/gallon, reversing three weeks of declines, but remains below the ~$6.52 record set three weeks ago
• ATRI’s 22-year survey shows fuel prices ranked No. 1 concern for trucking in 2023 — the metric either tops the list or doesn’t appear at all, with no middle ground

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.