How Fuel Surcharges Work in Trucking: Index, Peg, Scale

A fuel surcharge in trucking works like this: a public government diesel price is compared against a fixed price written into your contract, and the difference is converted into a charge using a scale the contract also specifies. Four inputs, in order: the index (which published diesel price), the peg (the price the line rate already absorbs), the scale (how the gap becomes dollars, either a per-mile divisor or a percentage bracket), and the week (which release governs this shipment). Every fuel surcharge on every invoice you will ever receive is those four numbers and nothing else.

That is the whole mechanism. The reason it deserves 2,000 words is that carriers rarely print all four on the bill, contracts often name only one or two of them, and the surcharge is usually the second largest number on a truckload invoice. You approve a line you cannot reproduce, on a load where the linehaul was negotiated to the penny.

This post walks the mechanism end to end and then recomputes an invoice from the published EIA number down to the billed dollar, once for truckload and once for LTL. If you want the truckload arithmetic in isolation, calculating a truckload fuel surcharge from the DOE index covers just the formula.

Why the surcharge exists as a separate line at all

Diesel moves faster than freight contracts do. A rate negotiated in October is expected to hold for a year, and diesel can move a dollar a gallon inside that year. So the industry split the rate: the linehaul covers everything the carrier can forecast, including diesel up to some assumed level, and anything above that level is billed separately, recomputed weekly, against a number neither party controls.

Two consequences follow, and they set up everything below.

First, the surcharge is a contract term, not a regulation. No federal rule sets a fuel surcharge, requires one, or dictates its formula. Practitioner accessorial taxonomies list fuel surcharge alongside the other accessorial charges, and like every other accessorial, whether it is owed and how much is determined by what you signed. When someone tells you the surcharge “is what it is,” they are describing a negotiating posture, not a rule.

Second, because the mechanism is arithmetic against a public number, it is the most auditable line on the invoice. Detention is a fight about minutes. Classification is a fight about density. The fuel surcharge is a fight about whether four numbers match the contract, and either they do or they do not.

Input one: the index

The number everyone calls “the DOE index” is the Weekly Retail On-Highway Diesel Prices series published by the Energy Information Administration, which sits inside the Department of Energy. It is a survey, not a futures contract or a market quote.

Per EIA’s published methodology, prices come in on Form EIA-888 from 590 retail diesel outlets across the contiguous United States. What gets recorded is the cash, self-serve pump price including taxes, as of 8:00 a.m. local time on Monday. Results publish Tuesday morning, and move to Wednesday when Monday is a government holiday. The release breaks out PADD regions plus a national average and a separate California figure.

Three implications:

• It is a retail price with taxes in it. A carrier buying negotiated bulk fuel is reimbursed against a pump benchmark. That is a design choice, not an error, but it undercuts the claim that the surcharge merely “covers cost.”
• There is one number per week and it never changes once published. No ambiguity about a week’s price, only about which week applies.
• There is not one index. There are eight. National, five PADDs, West Coast less California, and California. A contract that says “the DOE index” without naming the series has not agreed on a number.

For the week ending July 27, 2026, EIA reported a U.S. average of $5.313 per gallon, with the Gulf Coast (PADD 3) at $5.087 and California at $6.670. That spread is more than $1.58 a gallon between two figures that are both legitimately “the DOE price.” Which series your contract names, and what it costs you when it names the wrong one, is worked through in national versus regional PADD diesel index.

Input two: the peg

The peg (also called the base price, the trigger, or the threshold) is the diesel price the linehaul is assumed to already cover. The surcharge only pays for diesel above it.

The peg is the single most consequential number in the whole mechanism, and it is the one almost nobody negotiates. Old contract templates still carry pegs near $1.25 a gallon, a figure that made sense when it was written and now means the surcharge starts accumulating from almost the first dollar of diesel cost.

Here is the test worth applying: what diesel price does our linehaul assume? If the line rate was negotiated in a year when diesel ran above $4.00, a $1.25 peg means the same fuel is being paid for twice, once inside the base rate and again in the surcharge. If the carrier cannot answer the question, the peg is not derived from anything. It is inherited.

A high peg is not automatically better for you, either. Carriers price the peg and the line rate together, and a carrier that agrees to a $3.00 peg will want a higher line rate. That is a legitimate trade. What you want to avoid is a peg nobody can explain sitting under a line rate nobody connected to it.

Input three: the scale

The scale is how the gap between index and peg becomes dollars. Truckload and LTL do this completely differently.

Truckload uses a per-mile divisor. Divide the amount above the peg by an assumed MPG to get dollars per mile, then multiply by miles. The scale is continuous: a one-cent move in diesel produces a fraction-of-a-cent move per mile, every week.

LTL uses a percentage bracket table. The carrier publishes a table mapping ranges of the diesel price to a percentage, and that percentage is applied to the linehaul charge. The scale is stepped: inside a bracket, diesel can move nine cents and nothing changes. At a boundary, one cent moves every shipment. How those brackets are constructed, and where they go wrong, is the subject of reading an LTL carrier’s fuel surcharge table.

The truckload scale has two sub-inputs (MPG and the mileage basis) and the LTL scale has one (the base the percentage applies to). All three are negotiable and all three are frequently unstated.

Input four: the week

The index publishes weekly. Your loads do not. Something has to say which release governs which shipment, and that clause is where a large share of fuel surcharge overbilling lives.

Three conventions dominate, all defensible, none interchangeable:

1. The index published the Monday preceding the week of shipment, effective the following Monday.
2. The most recently published index as of the pickup date.
3. The index in effect on the delivery date.

On the same load in a moving market, those three select three different weeks and produce three different invoices. Convention one is the most common in negotiated truckload contracts and also the one carriers most often fail to implement, because it requires holding a stale number for up to six days after a fresher one is published. The full walk-through, including how to audit a batch of invoices for exactly this error, is in which DOE week applies to your fuel surcharge.

Worked example one: truckload, from the EIA number to the invoiced dollar

All contract terms below are illustrative. They are shaped like real terms but quoted from no carrier’s tariff. Use your own contract’s figures.

The contract says: EIA Weekly Retail On-Highway Diesel Price, U.S. average; peg $2.50 per gallon; 6.0 MPG divisor; index published the Monday preceding the week of shipment, effective the following Monday; miles per the carrier’s practical mileage guide.

The load: Dallas to Memphis, 452 practical miles, linehaul $904.00, picked up Thursday August 6, 2026.

Step 1. Select the week. Under this contract, an August 6 pickup is governed by the release published the preceding Monday and made effective the Monday of the shipment week. Walk the calendar with the contract clause in front of you, not from memory.

Step 2. Look up the index. Pull the number from the EIA weekly series rather than trusting the figure printed on the invoice. Say the applicable week is $5.313 per gallon, the U.S. average EIA published for the week ending July 27, 2026.

Step 3. Subtract the peg.

$5.313 - $2.500 = $2.813 per gallon above the peg

Step 4. Divide by the MPG assumption.

$2.813 / 6.0 = $0.46883 per mile

Step 5. Multiply by the billed miles.

$0.46883 x 452 = $211.91

Step 6. Sanity-check against the linehaul. $211.91 / $904.00 = 23.4 percent. If your other carriers on comparable lanes land near that and this one bills 38 percent, one of the four inputs differs.

Now the failure modes, holding everything else constant. Same load, one input wrong:

None of those look like an error on the invoice. Each one shows up as a single fuel line with a dollar figure on it. That is the point: the invoice looks identical in all five cases.

Worked example two: LTL, from the same EIA number to a percentage

LTL runs the same index through a different scale. Illustrative table:

The load: class 70 shipment, gross linehaul $1,400.00, a 65 percent discount off the class rate, delivered in a week whose applicable index is $5.313.

Step 1. Find the bracket. $5.313 falls in the $5.300 to $5.399 row, so the surcharge is 40.0 percent.

Step 2. Determine what the 40 percent applies to. This is the contested part. Gross linehaul of $1,400.00 gives $560.00. Net linehaul after the 65 percent discount is $490.00, and 40 percent of that is $196.00. Same shipment, same table, same week, a $364 difference produced by the order of operations. Your pricing agreement decides which one is right, and if it is silent, the carrier’s rules tariff decides.

Step 3. Check whether fuel applies to accessorials. Some tariffs apply the percentage to linehaul only. Others apply it to accessorials as well, so an $85 liftgate becomes $119. Defensible if the tariff says so, and not if it does not. It is also why an accessorial you should not have paid costs more than its face amount: when you dispute a liftgate fee on a dock-to-dock delivery, the fuel computed on top of it comes off with it.

What the invoice has to show, and what it usually shows

Be precise here, because overstating it weakens your position. No regulation sets a fuel surcharge formula or requires a carrier to publish its index basis on the bill.

What regulation does give you is a right to an itemized bill. Under 49 CFR 373.103, a freight or expense bill must show the consignor and consignee, shipment date, origin and destination, package count, freight description, weight or volume, the exact rates assessed, and the total charges due with the nature and amount of each charge, plus the route, participating carriers, transfer points, and remittance address.

A line reading “FSC 211.91” with no basis, no rate, and no index reference is thin against “the exact rates assessed.” Asking for the basis in writing is a reasonable request with a rule behind it, and a carrier that cannot state which week and which series it used has effectively conceded the audit.

In practice the fuel line shows cents per mile (truckload), a percentage that maps back to a published bracket (LTL), a separate “FSC basis” or “fuel week” field with a date (the best case, because you can check it in ten seconds), or a bare dollar amount. If it is the last one, ask for the basis.

Is it negotiable, and who actually sets it

FreightWaves’ explainer on trucking fuel surcharges covers who sets the surcharge, how often it updates, and whether it is negotiable. The short answer: the carrier or broker sets the mechanism, nobody in the industry sets the index, and everything except the index is negotiable. The peg is worth the most. The MPG divisor is next, and unlike the peg it is a factual claim about equipment, which makes it arguable with data. Then the floor and the cap: if diesel drops below the peg the truckload formula goes negative, and almost every contract floors the surcharge at zero rather than crediting you, but the contract has to say so.

If you are a broker, note that you carry two fuel mechanisms per load, one on the customer rate confirmation and one on the carrier agreement, and they may not share a peg, an MPG, an index series, or a week convention. Any structural difference is margin moving in one direction on every load, and it is invisible in a load-level P&L because both numbers look correct in isolation.

The checklist

Pull one invoice and one contract, and work through this in order.

1. Name the index series in the contract. National average, a specific PADD, California. If it just says “the DOE index,” that is your first finding.
2. Find the peg, and ask what diesel price the linehaul assumes. If nobody can answer, put it on the renewal list.
3. Find the scale. Truckload: MPG divisor and the mileage basis. LTL: the bracket table and what the percentage applies to, gross or net linehaul, and whether it touches accessorials.
4. Find the effective-date clause. Look for the words “preceding,” “in effect on,” “week of shipment,” “date of pickup,” “date of delivery.” Each selects a different week.
5. Look the index up yourself on the EIA weekly series for the week your contract selects, not the week the invoice claims.
6. Recompute. (Index - peg) / MPG x miles for truckload. Bracket percentage x the contractual base for LTL.
7. Sort variances by direction, not size. Scattered pennies both ways are rounding. Ninety percent one way is a configuration error, and configuration errors repeat on every future load until someone fixes them.
8. Contest in writing, with the arithmetic in the body of the email, and watch the clock: the window to contest a bill is shorter than most people assume, and the deadlines are collected in every freight billing deadline that can cost you money.

Do it once, carefully, because the payoff is not per-load. A fuel surcharge error is almost never a typo. It is a billing system configured to a peg, a series, or a date convention that does not match your contract, applying that configuration to every load you tender until somebody produces the arithmetic and asks for the setting to change.

Sources

• EIA, On-Highway Diesel Fuel Price Survey: procedures and methodology (Form EIA-888, 590 retail outlets, cash self-serve pump price including taxes as of 8:00 a.m. local Monday, Tuesday publication and Wednesday after a Monday holiday, PADD plus national and California breakouts)
• EIA, Gasoline and Diesel Fuel Update (week ending July 27, 2026 national and regional on-highway diesel prices)
• EIA, Weekly U.S. No 2 Diesel Retail Prices (weekly on-highway ultra-low-sulfur diesel retail price series)
• 49 CFR 373.103, Form of freight bill (Cornell LII)
• FreightWaves, Fuel surcharges in trucking (who sets the surcharge, update frequency, negotiability)
• Top 20 accessorial charges, practitioner taxonomy (Zipline Logistics)