Diesel Prices Hit Record High in the U.S. Prompting HOS exemption

On Friday, September 18, the price of diesel reached a new record, averaging nearly $6.45 per gallon in the United States. Oil prices remained above $100 per barrel, while supply restrictions pushed more state averages to new highs, according to AAA records.

At the regional level, differences in diesel prices are becoming increasingly evident, according to the U.S. Energy Information Administration (EIA). While prices on the East Coast are following a pattern similar to the national average, prices on the West Coast have surpassed $8 per gallon due to factors such as high taxes, limited refining capacity, and greater dependence on imports.

Meanwhile, in the Midwest, increased demand during the harvest season, combined with disruptions at some refinery operations, has pushed diesel prices close to $7 per gallon.

Global Fuel Supply

Global fuel supplies have been affected by the war involving the United States, Israel, and Iran, as well as Ukraine’s attacks on Russian refining facilities. In the United States, farmers are facing record-high diesel prices right in the middle of harvest season, putting even more pressure on their already narrow profit margins.

Against this backdrop, food prices at U.S. supermarkets are likely to increase ahead of the November midterm elections. According to the latest Consumer Price Index, consumer food prices rose 2.7% year over year in August.

Although fuel accounts for a relatively small portion of the final cost of food, consumers could begin to notice higher prices in the coming months. However, these increases may take time to show up. Some retailers may choose to temporarily absorb the additional costs rather than immediately pass them on to consumers. Likewise, some transportation contracts negotiated earlier at lower rates may still not include the new surcharges resulting from higher fuel prices.

Independent carriers, who typically have to pay for fuel upfront, could face greater difficulties absorbing further increases in these costs, according to Dean Croke, a senior analyst at DAT Freight & Analytics, in a report published by Reuters.

Hours-of-Service Exemption

In response to rising diesel prices, the Federal Motor Carrier Safety Administration (FMCSA) has suspended hours-of-service regulations for drivers transporting diesel fuel and gasoline for the next 90 days, with the goal of reducing disruptions to fuel supplies.

Under the FMCSA’s requirements, drivers must continue to take a six-hour rest period in the sleeper berth at least once during a 24-hour period, or an eight-hour rest period if they are operating a day cab.

The exemption will apply only to truck drivers who are in compliance, excluding anyone with a conditional safety rating or an active out-of-service order, according to the Department of Transportation in a statement.