The 2020 Mid-Year Economic Update_long

Fuel Costs Affect Distributors’ Expenses, 2014 Plans

Fastenal and United Natural Foods are taking changing costs into account.

Drivers last year paid about $3.49 per gallon of gas, significantly lower than the $3.60 they paid in 2012, according to a new report from the American Automobile Association. Gas prices have edged down as refineries have upped their reliance on North American crude oil, a trend the AAA expects to continue in 2014.

Fuel prices had a positive impact of 8 basis points on United Natural Foods' operating expenses in the first quarter, according to CFO Mark Shamber. "Nationally, our diesel fuel cost in the first quarter of fiscal 2014 decreased by approximately 3.3 percent from the prior year's first quarter while the national average price decreased," he said.

Fastenal, which recorded a slight increase in per gallon fuel costs for its distribution, store delivery and other sales-centered vehicles during the third quarter, is hoping to realize greater fuel cost reductions in the future. CEO Will Oberton said during Fastenal's 2013 Annual Shareholder Meeting that the company is testing the use of natural gas-run tractors "to lower emissions, lower our cost and try a fuel that's actually plentiful here in the United States," he said. "The test is going well, (but it's) way too early to determine if we will have 20 of them next year or 200 of them. But over time, we believe it will be something that we'll be able to deploy within our fleet."

According to the AAA, gas prices should decrease slightly in 2014 and dramatic price spikes should be limited, as increased refinery capacity and domestic oil production "should provide a supply cushion."

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