How prepared is the U.S. Postal Service for a sudden increase in the price of diesel fuel? When diesel climbed by $2.03 a gallon from March 2009 to March 2012, the USPS’s fuel tab soared by $341 million.

It’s what happens when you operate one of the biggest vehicle fleets in the country: 7,600 of its own in addition to almost 16,000 contract vehicles. In fiscal year 2016 alone, USPS bought about 251 million gallons of diesel at a cost of over $570 million.

Of course, the flip side is also the upside: From early 2014 to early 2016, a $2 drop in the price of diesel fuel reduced the Postal Service’s fuel costs by $413 million.

But diesel fuel has proven an extremely unstable cost to manage. It’s not just that fuel prices fluctuate. It’s all the unanticipated domestic and global events ― natural disasters, disruptions of or reductions in the fuel supply, or even a sudden oversupply of fuel ― that can send prices ricocheting up and down.

Our recent audit report looked at whether the Postal Service has positioned itself to mitigate the risks associated with current projected increases in diesel fuel prices or an increase in consumption. We found it hasn’t. In particular, it needs to require more protection in its contracts with highway contract route (HCR) suppliers.

Despite declines in diesel fuel costs and mail volume, HCR miles and overall costs continue to increase. That is, even with a 4.3 billion decline in mailpieces between FYs 2013-2016 and lower diesel fuel costs, HCR miles increased, as did overall HCR costs. This increase in HCR mileage could expose the USPS financially if diesel fuel prices were to increase. It needs to get a better handle on HCR mileage.

The Postal Service also needs to move more aggressively toward its goal of reducing HCR diesel fuel use by 20 percent by 2020. To date, it has achieved only a 0.1 percent reduction. We recommended management continue to work with HCR suppliers to encourage their use of alternative fuels, perhaps through an incentive program that shared the savings. We also suggested exploration with Congress of a fuel surcharge, unallowable under current law, to recover increased fuel costs.

What ways would you recommend the Postal Service prepare for diesel fuel price fluctuations? 

Comments (1)

  • anon

    One I do remend saving thru different gas company most service station off almost up to one off on gas when using they simply promotion card for example Kroger and mapco you simply sign up for a promotion card and you save at the pumps I am not sure if we as USPS allow to use these programs but most of your employee have these saving both these companies I can just add additional my phone number and saved the company cost but no one ever told us we can do this second saving we don't use diseal gas but it have been accidentally were carrier have put diseal fuse in these old trucks and they still runs Eastern district need to more alert on gas been used and make sure these employee are in the right place working for the company there is a lot of abused in using gas in our company we have some employee who goes home to check on their children to pay bills when they should be working like our competitors they DPS tracking system work for the good of the company but on the other hand in Memphis they only used the DPS tracking system only to watch employee that the area manager dislike we as a company waste millions of dollars doing a lot of in stupid stuff I no all problem can't be fix Eastern district need to make serious changes if you pay a team to ride everyday you should be able to save the USPS millions on high gas prices

    May 17, 2017

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