How to tie a fuel price adjustment to EIA diesel prices, with a 160,000-cubic-yard earthwork example

Section 1  How the clause works

FHWA gives four ways to estimate the gallons a job burns

The Federal Highway Administration set out how highway agencies can write these clauses in Technical Advisory T 5080.3, dated December 10, 1980. It explains why fuel needs its own method. Fuel is usually incidental to the project and is not paid for directly, so the owner needs an agreed estimate of how much fuel the work burns.

The advisory describes four ways to get that estimate:

1. Fuel usage per unitEach unit of completed work, such as a cubic yard of excavation or a ton of asphalt, carries a fixed number of gallons.
2. Specified total fuelThe owner puts its estimate of total gallons in the bid documents and releases it against a schedule tied to percent complete.
3. Bid itemThe bidder enters a lump sum for fuel, capped by the owner, and it is paid out on the same schedule.
4. Percent of costFuel is a set share of the dollar value of work on each progress estimate, such as 13% to 15% for grade and drain work.

FHWA says these methods are not designed to estimate the fuel a contractor burns. They give both parties a reasonable basis for average conditions. FHWA also advises against paying from contractor fuel invoices, citing the audit work and the room for manipulation.

The per-unit factors come from a July 1974 survey published by the Highway Research Board, now the Transportation Research Board, and attached to the advisory. These are the diesel figures.

The earth excavation factor covers mobilization, clearing and grubbing, excavating, hauling, compacting and subgrade preparation, for hauls up to about 5,000 feet. FHWA notes that urban jobs that haul by truck may burn more than the table shows. Gasoline has its own factors in FHWA's table.

Section 2  Pick the index

Regional diesel prices rose between 60.4% and 81.3% in a year

FHWA asks for an index that contractors and suppliers cannot manipulate, either built by the owner or taken from government price data. EIA says many shippers, carriers and truckers use its weekly retail diesel price in their fuel pricing formulas.

EIA collects the cash self-serve pump price, including taxes, at 8:00 a.m. local time each Monday from a sample of 590 truck stops and service stations, and publishes it around 10:00 a.m. Eastern on Tuesday. EIA's FAQ says the agency does not calculate fuel surcharges and does not endorse any method.

The clause should also name the geography, because regions moved by different amounts over the past year.

With a base one year back, a clause tied to the Gulf Coast index would pay $2.647 a gallon, and one tied to the Lower Atlantic index would pay $2.162 on the same gallons.

Some state DOTs build their own index. New York State DOT posts an average price for fuel each month, on or about the 25th, for its Fuel Price Adjustment item. Its September 2026 price was $3.85, which is 86.0% above its February price of $2.07. EIA's national retail average rose 69.0% over the same months.

The two series measure different prices, and NYSDOT's page refers readers to its standard specifications for how the payment is calculated. On a state contract the specification names the index. On a private subcontract, name the EIA series and the region in writing.

Section 3  Set the trigger, the cap and the dates

FHWA recommends a trigger of 3% to 10% and a cap of 25% to 100%

FHWA recommends the following:

• A trigger between 3% and 10%, so small moves pay nothing. AASHTO suggested 5% in a 1974 guide.
• A ceiling on upward adjustment, written as a percentage, in the range of 25% to 100%, and a floor on downward adjustment.
• Adjustment in both directions, so the owner takes a credit when prices fall.
• Monthly computation, paid automatically on the progress estimate, so the contractor has no option to accept or reject it.
• During an unapproved time overrun, either hold upward adjustment at the last index within the contract time plus extensions or stop adjusting.

Take February 2025 as a base month. EIA's monthly average then stayed between 4.8% below and 4.0% above that base through February 2026, so a 5% trigger would have paid nothing for a year. In March 2026 the price was 33.9% above the base.

Section 4  A worked example

The example clause pays $72,590 on 160,000 cubic yards

The figures below are an example. A sitework subcontractor bids 160,000 cubic yards of earth excavation in February 2026 and works it from March through September. The subcontract uses the per-unit method with FHWA's average diesel factor of 0.29 gallons per cubic yard, EIA's U.S. monthly average, a February 2026 base of $3.722, a 5% trigger and a 50% cap.

1. GallonsEach month the project manager multiplies the cubic yards on the pay application by 0.29 to get gallons.
2. RateThe adjustment per gallon is the month's EIA price minus the base.
3. CapThe 50% cap limits the recognized price to $5.583, which is 1.5 times the base.

The job burns an estimated 46,400 gallons, which cost $172,701 at the February price. Every month cleared the 5% trigger. Without a cap, the clause pays $74,791. The cap binds in May and September and brings the total to $72,590.

Section 5  Next steps

How to start on your jobs

List every open job with earthwork, paving or hauling still to place, and check each contract for a fuel adjustment clause. Where one exists, write down the index, the region, the base month, the trigger and the cap, and check that the monthly adjustment shows up on the pay estimate.

For bids going out now, pull fuel gallons per unit from your own equipment logs for the last three closed jobs of the same type. Compare them with the FHWA factor before you propose a clause or accept the owner's.

Data: EIA monthly diesel, EIA regional prices, NYSDOT and EIA, FHWA usage factors, FHWA percent of cost, the worksheet (CSV files)