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Evolve: How higher fuel prices affect trucking and rail

‘The entity in the freight industry that is most jumping up and down in excitement about this is intermodal rail’

FrieghtWaves' John Kingston

This #WithSonar episode recap is from Evolve: The Next Evolution of Oil & Gas, a virtual summit presented by Digital Wildcatters and FreightWaves.

TOPIC: The power of SONAR for the energy industry

DETAILS: Crude-oil pricing is rising, and with it diesel. Fuel cost increases are flowing through to shippers, leaving most trucking companies unscathed. But if diesel goes high enough, shippers could opt for intermodal rail over trucking.

SPEAKERS: FreightWaves SONAR account executives Kyle Taylor and Luke Falasca and John Kingston, executive editor and oil market expert at FreightWaves.

BIO: Kingston has covered commodities for over 40 years, with most of his career spent at S&P Global Platts. At FreightWaves, he has managed the editorial team, launched FreightWaves Radio on SiriusXM Radio, created the Drilling Deep podcast and written about a wide variety of trucking and energy subjects. 


“The DOE [Department of Energy weekly price of diesel per gallon (SONAR: DOE.USA)] is up over the past 17 straight weeks. The previous record was 15 weeks. What I find fascinating is that there has been very little pushback [from the trucking industry]. To me, that affirms that fuel surcharges are working as they’re supposed to. It puts that cost of fuel for the fleet to the shipper. This is absolutely affecting the shipper. They are certainly paying for it.”

“The entity in the freight industry that is most jumping up and down in excitement about this is intermodal rail. It is far more energy efficient to move a ton of freight by rail than by truck. Of course, it’s not as quick, but when the price of diesel gets really, really high, the cost benefits of the intermodal operation really stands out. So, that is the one part of the supply chain that is really loving this.”

“OPEC production is about 24.9 million barrels per day. There are projections that OPEC needs to produce 28.1 million barrels per day by the third quarter to keep the market balanced. So, you are talking about more than a 3 million barrels per day deficit by the third quarter. That’s really leading to some of these price increases. Brent bottomed out at around $20 in April [2020] and is now solidly over $65. And going forward, without any changes, the supply-demand balance will call for higher prices.”