Calculation of a Fuel Surcharge

by Karen Rogers, Demand Media
A fuel surcharge helps offset your drivers' fuel costs.

A fuel surcharge helps offset your drivers' fuel costs.

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A fuel surcharge lets you pass on some of your fuel costs to your customers. The surcharge kicks in when fuel prices exceed your predetermined threshold amount. Trucking and moving companies use the fuel surcharge as a way of recouping high fuel costs. Each company has its own method of calculating the fuel surcharge. The dollar value of the fuel surcharge depends on the amount of fuel used and the number of miles driven. You can use a formula to calculate the exact surcharge amount or base the surcharge on a per-gallon price range.

Fuel Price Information

The U.S. Department of Energy tracks the prices of gasoline and diesel fuel around the country. Every week, the agency releases a report of the retail fuel prices on its website. The report provides the fuel cost based on the national average and by region. You can use whichever amount you prefer. For example, say your company is located in the East Coast Region. If the national fuel price average is $3.194 a gallon and the East Coast Region average is $3.243 a gallon, you can use the East Coast Region amount in your surcharge calculations.

Surcharge Mileage Components

You can use the actual mileage or an average mileage rate to calculate the fuel surcharge. You also need to know the average miles per gallon for your vehicles. If you want to use the actual mileage, you must keep an accurate and separate log for each job. The total billable mileage starts when you pick up the load and ends when you drop it off. If you want to avoid the record-keeping duties, use the average mileage for jobs in the same area.

Fuel Surcharge Range Calculation

Using a price range based on the total amount of fuel consumed eliminates the need to calculate the fuel surcharge for each job. For example, say you decide the surcharge applies when the price of fuel reaches $3.25 a gallon. You charge an additional 4 percent when the fuel price is between $3.26 to $3.50 a gallon. If your customer’s fuel cost is $50 and you charge an additional 4 percent surcharge, the dollar surcharge amount is $50 multiplied by 4 percent, or $2. You would bill your customer $52.

Fuel Surcharge Formula Calculation

To use the formula to calculate your fuel surcharge, subtract your fuel threshold amount from the actual price per gallon and divide that amount by vehicle’s miles per gallon. This gives you your per-mile surcharge amount. For example, subtract the $3.50 actual price per gallon from your $3 threshold amount to get $0.50. Divide $0.50 by the vehicle’s four miles per gallon to get your fuel surcharge rate of $0.125 per mile. If you drove 100 miles, your customer pays an additional fuel surcharge of $0.125 multiplied by 100, or $12.50.

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