How Will Fuel Prices Impact The Heavy Equipment Sector

  • Editorial Team
  • Construction Career Outlook
  • 20 February 2024

The economic graph for the heavy equipment industry in the U.S. has turned the bottom side up. Firstly the supply chain put extreme barriers in the production and distribution of heavy equipment.

Now other factors like material shortage, labor issues, and increased fuel and material costs are intensifying the trajectory.

On that note, massive petrol and diesel price increments are the latest talk of the town.

The non-residential construction project price for heavy machinery rose to 20.9% as compared to last year.

Similarly, the contractors claimed that the price of creating 5 different types of nonresidential projects has risen to 19.9%.

According to the Chief Economist at Associated General Contractors, the bid value index has become less in comparison to the cost index within 19 months.

However, noticeable labor wage increments along with human resource shortages are cheery on top as worker’s pay has increased to 6.3% from the last year which is the biggest hike in four decades in the history of the heavy construction equipment industry.

The Influence Of Fuel Price Over Equipment And Process Cost

The fuel cost makes up 64.5% of the total heavy equipment production cost along with other operating expenses. However, if you own the machinery it’ll add up to 35.5% of the operating cost.

Above that, the fuel prices have increased by 74% in comparison to 2022 and 2023. With increased prices, the total heavy equipment maintenance prices increased to 42%. The diesel fuel price increased from $2.59/gallon to $5.81 per gallon.

As per the above data, it’s safer to say owning heavy equipment is better than renting one to handle fuel price hikes.

Do you want to learn about how to go fuel-efficient with heavy equipment? Go through our FREE Fuel Saving Guide here. 

A more sustainable option is to buy used heavy equipment from renowned heavy equipment suppliers.

In case you want to buy a fuel-efficient used heavy machinery from renowned manufacturers find it on at reasonable rates and take smart steps towards increasing your construction profitability rate amid increased fuel prices.

Similarly, other rices that get influenced by increased fuel prices include;

  • Parts and attachment rate
  • Lube and filter tanks rate
  • Tire maintenance cost

This volatility of fuel cost influences the project’s over-expense rate along with contractors’ and labor’s daily wages. At times managing unexpected fuel costs becomes a challenging price for the contractors.

The Location Matters

The fuel price increased to $5 per gallon. The hike in fuel prices was seen after the Ukraine-Russa war. And currently, the prices are likely to increase further due to the overall global recession.

Despite the $1.2 trillion construction package by the U.S. government most of the capital still needs to be invested wisely.

Therefore, with such a huge development capital and 5 big regions of the U.S. chasing to equip heavy machinery and begin constructional development, the survival hustle has just started.

What’s Ahead?

The increase in nonresidential work in the U.S. is giving rise to heavy machinery demand. It has produced a hike of contractors and business owners to level up their inventory with machinery especially used heavy construction equipment.

Amidst the demand for heavy machinery, the supply chain cycle of the global fuel surcharge has turned upside down.

The increased rates and supply obstacles are a matter of concern to look ahead in the coming years. However, getting hands-on used heavy equipment can help buyers save big and utilize the amount to fulfill fuel needs.