Washington's Metro system expects to save about $2.8 million in its next fiscal year because of falling fuel prices.
Overnite Transportation Co., which will buy about 46 million gallons of diesel fuel this year to keep its trucks on the road, was paying 66.85 cents a gallon for it in February, compared with 80.07 cents a gallon a year ago.
USAir, which saves about $4 million a year with each one-cent decline in the price of fuel, paid an average of 79.74 cents a gallon for jet fuel in 1985 -- down from 84.8 cents in 1984, and way down from $1.03 in 1981.
In January, Amtrak paid a Chicago supplier 80.5 cents a gallon for diesel fuel. Today, that charge is 50 cents a gallon. And CSX Corp.'s diesel-fuel costs in the first quarter of 1986 were 15 percent lower than for the same period in 1985.
In a larger-scale version of the happy motorist patting his billfold after filling up for $12 instead of $21, transportation companies are eying greatly reduced operating costs because of declining fuel prices.
For some railroad companies that also own oil- and gas-producing properties, some of the advantages are offset. "It's not an unmixed blessing," said Henry H. Livingston, a rail industry analyst for Kidder, Peabody. And, in the long run, it may even create a competitive disadvantage for railroads, said Harvey A. Levine, vice president of economics and finance of the Association of American Railroads.
"Fuel is a greater proportion of trucking costs than it is of rail costs," according to Levine. "In some traffic areas, it will help the truckers more than the railroads."
Shippers are anticipating the savings for transportation companies as an advantage that they expect to have passed on to them.
Particularly in the case of railroads, the decline in fuel costs has generated a sharp controversy.
Railroad rates are set, in part, based on an index called the Rail Cost Adjustment Factor. In the first quarter of 1986, the Interstate Commerce Commission adjusted that index up by 1.1 percent, based on figures from the railroads that included an anticipated increase in the cost of fuel. More than half of that increase was due to over-forecasting what fuel prices would be, according to Ron Young, director of the ICC's bureau of accounts.
The ICC has tentatively reduced the index for the second quarter of 1986 by 4.3 percent. However, although railroads may increase rates based on an increase in the index, it is not clear that the ICC has authority to order rates reduced when the index goes down.
"The way things stand right now, there is no provision for reducing rates . . . That's the contentious issue right now," said Young. The commission is holding up action on the second-quarter index while the issue is reviewed, he said.
Shippers complain that they are paying for "phantom" costs and that, under the system as it has operated, they have no opportunity to recover that money. Charles W. Nicolson, vice president for fuels for Pepco, said that the rates the utility pays to ship coal to its generating plants went up in the first quarter of this year as a result of the ICC action, and that the increase will cost Pepco about $3 million for the year.
"They went up . . . to some degree on a false premise. The false premise, of course, was that the price of fuel was going up, although prior to the ICC's blessing of that increase, OPEC [the Organization of Petroleum Exporting Countries] fell apart and prices started going down," he said. "The ICC didn't take any of that into account, even though a lot of people complained."
According to Levine, the shippers are exaggerating the problem. Two things mitigate the impact of the first-quarter increase, he said. One is that many shippers have contracts with railroads that allow prices to go down, as well as up, based on the ICC's index. Those shippers will get the benefit of the large decline in the index, he said. In addition, although railroads may raise their rates based on the index, not all rates are raised, he said. Most of the forecasts on which the index changes have been based over the years have been reasonably accurate, he said. He also said that over-forecasts and under-forecasts have balanced out.
"We lose that quarter where the error was. It doesn't balance out," said Nicolson. About half of Pepco's rail rates are set by tariff, which is a price set by the railroads rather than a price negotiated by contract, he said.
Even though consumers may not be getting a complete pass-through of the savings that transportation companies are enjoying, what they do get looks very good.
"The airline industry's unit-cost picture has improved dramatically, and the outlook is favorable," according to a report by airline industry David J. Smith of Sanford C. Bernstein & Co. Inc. "Fuel costs are expected to drop 20 percent in real terms in 1986." That can make a big difference when an airline is filling up a Boeing 737-300 with a 5,358-gallon tank.
"It's hard to predict what the overall benefit will be by year end," said Roy S. Cayton, executive vice president of Overnite Transportation.