US diesel averages $6.06 a gallon, a record, as crude tops $100
Diesel broke $6 a gallon nationwide for the first time. AAA put the national average at $6.0556 on Friday, a record, up 14 percent in a month and 24.1 percent across August. Crude is back above $100, and every mile a truck runs just got more expensive.
Fuel surcharges
Surcharge tables reset off the government's weekly diesel number and lag the pump by a week or two. When diesel climbs this fast, the surcharge a shipper pays today reflects fuel from before the run-up, and the carrier eats the gap. Owner-operators and small fleets feel it first, because they buy fuel now and collect the surcharge later.
Capacity
Uber Freight's Q3 Market Update, out Thursday, says truckload conditions have started to stabilize after two quarters of rate inflation, but capacity is still struggling to recover and truckload rates are sharply above year-ago levels. The firm flags the risk of another jump in spot rates in the fourth quarter if demand accelerates, with strain rippling into LTL and intermodal. Tight trucks plus $6 diesel is a rough setup for anyone moving freight into the holidays.
The $5 gasoline call
Jeff Currie, who ran Goldman Sachs' commodities desk and now heads Real Macro, told Bloomberg Television on Sept. 11 that the odds of average US gasoline hitting $5 before the November midterms are "extremely high." He tied it to scarcity and currency debasement, and said shortages that began in refined products are now spreading into crude. "Crude is the signal, and now we think about products," he said. Treat it as one veteran's read rather than a lock.
Farmers and base oil
Record diesel lands hard on farmers heading into harvest and is already pressuring ag equipment demand. Base oil costs are climbing again too. JobbersWorld reports 4 and 6 cSt Group III grades remain extremely difficult to source, which could squeeze anyone blending or buying finished lubes over the next few weeks.
What to watch
Whether the DOE weekly diesel figure confirms the AAA spike, and how fast surcharge tables catch up to it. Whether Uber Freight's fourth-quarter spot-rate risk shows up if holiday freight demand firms. And whether crude holds above $100 or eases back, since that sets where diesel goes from here.