# Dealing With \$4 Diesel

With record-high prices on new vehicles, \$4/gal. fuel, and the limited maintenance and repairs that can be performed at the ranch on newer model vehicles, how much does it cost per mile to operate a one-ton diesel ranch/town truck? Extension specialists Ron Torell (Nevada), Willie Riggs (Oregon) and Duane Griffith (Montana) have an answer. The trio modified a Texas A&M University Excel software program

With record-high prices on new vehicles, \$4/gal. fuel, and the limited maintenance and repairs that can be performed at the ranch on newer model vehicles, how much does it cost per mile to operate a one-ton diesel ranch/town truck? Extension specialists Ron Torell (Nevada), Willie Riggs (Oregon) and Duane Griffith (Montana) have an answer.

 Table 1. Costs associated with operating a one-ton, used diesel truck Select table to enlarge Table 2. Influence of miles driven/year on total cost/mile Select table to enlarge Table 3. Influence of miles/gal. on total cost/mile @ \$4/gal. fuel Select table to enlarge Table 4. Influence of price/gallon on total cost/mile @ 15 mpg Select table to enlarge

The trio modified a Texas A&M University Excel software program to generate an automobile spreadsheet calculator that determines cost per mile of operation. They used actual costs of operating their personal one-ton diesel truck vehicles (Table 1), which approached 70¢.

Table 2 shows that as miles driven per year increase, cost of operation per mile declines dramatically. This is easily explained by economy of size. Fixed cost, such as insurance, license, taxes, interest and depreciation, are spread over more miles.

Tables 3 and 4 show the impact of fuel economy on cost of operation per mile driven. Interestingly, while the cost of fuel did impact the bottom line, it was not as significant as the number of miles driven per year. Again, this has to do with spreading those fixed costs over more miles.

Vehicles in this example were purchased used. When using a “dream” \$40,000 purchase price for a new vehicle, the cost of operation per mile driven rose from 67¢ to 91¢/mile. All other input variables were left the same, recognizing that many input costs, fixed and variable, would change.