Natural gas surcharges steady, diesel on the rise

At the start of the month, fabricators saw their energy surcharges from most glass manufacturers edge up from $1,250 in the third quarter to reach $1,300. The natural gas portion of the surcharge remained at $900, while the diesel surcharge rose from $350 to $400.

“Through the third quarter of 2006, we continue to see a slight decrease in the cost of natural gas and a slight increase in diesel fuel,” wrote Scott Follett, director of new products and development for flat glass products for Pittsburgh’s PPG Industries, in a Sept. 15 letter to U.S. customers.

Manufacturers calculate the natural gas surcharge based on the past three-month average of the New York Mercantile Exchange. Although prices for natural gas dropped 4 percent for the quarter, surcharges did not go down, according to the manufacturers’ price letters.

Companies base diesel fuel calculations on the previous 12-week average of the Retail on Highway Diesel Prices from the U.S. Department of Energy. According to the report, the average price per gallon from June 26 to Sept. 11 reached $2.96, up from $2.84 in the previous 12-week period.

The current surcharges will continue through the fourth quarter until they will be recalculated based on new averages.

To read more about how surcharge increases affect fabricators, click here, and glaziers, click here.