Diesel: not dropping like Gasoline?

[Saturnalia]

How come diesel isn't dropping like gasoline is? I see that it has begun to fall, which will help the RRs, but why not the halving- in price that we have seen with regular unleaded?

[CSX_CO]

How come diesel isn't dropping like gasoline is? I see that it has begun to fall, which will help the RRs, but why not the halving- in price that we have seen with regular unleaded?

Railroads buy enough that they aren't paying retail value like you see a the pumps. Yes, price coming down helps but they weren't paying full "retail" at the pumps.

Practice Safe CSX

[12Bridge]

Not to mention they get a different type anyway, Offroad vs. Over the Road.... Same stuff, different color, different tax.... in theory..

[Saturnalia]

Not to mention they get a different type anyway, Offroad vs. Over the Road.... Same stuff, different color, different tax.... in theory..

So is it dropping for them? Do they also hedge like the airlines do and lock into rates?

[Bulby]

The supply of diesel isn't increasing as much as supply of gas is.

[ns8401]

The supply of diesel isn't increasing as much as supply of gas is.

Not only that but the processes to make it are different.

[Saturnalia]

...I just thought they would drop like gasoline with the drop in crude oil.

Guess not!

[ns8401]

...I just thought they would drop like gasoline with the drop in crude oil.

Guess not!

Different process = different rates of decline.... Diesel is on the downward trend though.

[hoborich]

I don't know about the process to make diesel. But the cost of crude oil to make diesel is the same as the cost of crude oil to make gasoline! And gasoline is more highly refined than diesel. I'm guessing it's more likely politics is involved.

[Bulby]

I'm guessing it's more likely politics is involved.

one acronym: ULSD.

(Ultra Low Sulfur Diesel)

[MSchwiebert]

Yes, and they also collect fuel surcharges when the cost of diesel crosses above a certain threshold.


http://phx.corporate-ir.net/External.Fi ... lwZT0z&t=1

If you look at the linked (above) pdf file on page 10 (slide# 19) it shows fuel surcharge collection amounts by quarter. Keep in mind that there's no mandated "standard" on how to calculate surcharge amounts, but in CSX's instance shown on this slide it appears to be a comparision between the weekly average highway diesel price (could be national, could be in CSX's service area) and the monthly average highway diesel price (again could be national, could be in CSX's service area. Obviously both the monthly and the weekly would be calculated from the same whichever it is). Now the kicker is that the Monthly average has a 2 month lag, so if the weekly average is lower (like it was in Q3 2014) it's beneficial to CSX. Conversely if the weekly value is higher than the 2 month average it's detremential to CSX.
I've also attached a link to CSX's most recent surcharge announcement below, it gets a little more into the methodology of how they're calculated etc.


http://www.csx.com/index.cfm/customers/ ... words=fuel surcharge

Not to mention they get a different type anyway, Offroad vs. Over the Road.... Same stuff, different color, different tax.... in theory..

So is it dropping for them? Do they also hedge like the airlines do and lock into rates?

[Toppysager]

I almost think it would be beneficial to railroads if diesel didn't drop, because shippers and customers like the fuel efficiency of railroads. If diesel were to drop to $1.75 like Regular, they may put more stuff on trucks. When gas was all $4 a gallon, railroads were an obvious choice

[Saturnalia]

Biggest hurdle for truckers (and to some extent railroads) is crew availability. Doesn't matter what the pump costs, if nobody is there to drive!

[bdconrail29]

Biggest hurdle for truckers (and to some extent railroads) is crew availability. Doesn't matter what the pump costs, if nobody is there to drive!

I would say that's a rather large limiting factor for railroads as well. Could the Chicago Line handle 90 trains/day? Maybe. Will there ever be enough crews? Never.

[Saturnalia]

Biggest hurdle for truckers (and to some extent railroads) is crew availability. Doesn't matter what the pump costs, if nobody is there to drive!

I would say that's a rather large limiting factor for railroads as well. Could the Chicago Line handle 90 trains/day? Maybe. Will there ever be enough crews? Never.

Are you sure about never?

[ns8401]

Biggest hurdle for truckers (and to some extent railroads) is crew availability. Doesn't matter what the pump costs, if nobody is there to drive!

I would say that's a rather large limiting factor for railroads as well. Could the Chicago Line handle 90 trains/day? Maybe. Will there ever be enough crews? Never.

Are you sure about never?

It's definitely not real likely...

[Jetlink]

Another factor to consider is the demand for Diesel is somewhat different than the demand for gasoline. Diesel is the fuel of the military, of industry, of commerce. Users with very solid and very constant demands. Users that often can often pass energy costs through to customers. Users with demands that are not as discretionary as the demand for individual personal travel. The market recognizes this.

[ns8401]

Another factor to consider is the demand for Diesel is somewhat different than the demand for gasoline. Diesel is the fuel of the military, of industry, of commerce. Users with very solid and very constant demands. Users that often can often pass energy costs through to customers. Users with demands that are not as discretionary as the demand for individual personal travel. The market recognizes this.

And prices the product accordingly with that dependence in mind.

[CSX_CO]

I would say that's a rather large limiting factor for railroads as well. Could the Chicago Line handle 90 trains/day? Maybe. Will there ever be enough crews? Never.

Are you sure about never?

It's definitely not real likely...

Been over this before...

1 train requires 3 crews to run it 7 days a week on an assigned pool. 4 crews required for 1 train to run it 7 days a week in an unassigned pool. So, at best, to run 90 trains you need 270 crews if they work 7 days a week, 365 days a year. Two man crews means 540 people. That doesn't count associated people required to hold an extraboard to fill vacancies, etc.

Not all jobs can be assigned, as they don't have a return train that runs at a time that allows the crew to get to away from home terminal, take required rest and get back. So, with 90 trains, 4 crews to protect 7 days a week, you're looking at 360 crews, or 720 people to protect. That's just at ONE terminal on the trains trip. Multiply that across the length of the railroad. You're looking at 800 people to protect 90 trains at just one terminal.

It would be impossible to train that many people, and keep them, to make that happen.

Practice Safe CSX

[Saturnalia]

Well UP in particular seems to have enough crews into and out of North Platte...which would be well over 90 trains per day...