Why Diesel Price Volatility Is Becoming a School Transportation Challenge
For school district leaders, few budget items are as difficult to predict as fuel costs. Buses need to run every day regardless of what happens in energy markets, yet transportation budgets are often set months before the school year begins. When diesel prices spike unexpectedly, districts are left with little choice but to absorb the additional expense or make difficult tradeoffs elsewhere.
Recent data from the School Superintendents Association (AASA), the Association of School Business Officials International (ASBO), and the National Association for Pupil Transportation (NAPT) underscores just how widespread the challenge has become. More than half of school districts surveyed reported that fuel spending is already running over budget for the 2025-26 school year. More than one-third said diesel costs have exceeded projections by at least 11%, while 14% reported fuel expenses more than 20% above budget.
The consequences extend well beyond transportation departments. According to the survey, 63% of districts are absorbing higher fuel costs within existing transportation budgets, while nearly one-third are transferring money from other programs to cover the difference. Almost one in five districts have turned to reserve funds, and 40% have adjusted or consolidated bus routes in an effort to reduce fuel consumption. For district leaders, rising diesel prices are not simply a transportation issue; they have become a broader budgeting challenge.
The challenge is not simply that diesel can become expensive. It is unpredictable.
School transportation has always been exposed to factors outside a district’s control, from global energy markets and supply chain disruptions to geopolitical events that can quickly impact fuel prices. Unlike many operating expenses, diesel costs can change dramatically over a matter of weeks, creating budget uncertainty that ripples across an entire school system.
The impact is already being felt in communities around the country. In Milwaukee, for example, the district recently reported paying approximately $800,000 in diesel fuel surcharges between March and June alone under its transportation contracts as fuel prices climbed above established thresholds. Those are dollars that could otherwise be directed toward classrooms, student services, or other operational priorities.
District leaders across the country are facing similar pressures. As Jeremy Patterson, Superintendent of Jackson Public Schools in Michigan, recently noted, “Fuel prices are always something that we think about. How do we control expenses? And we certainly understand that, as a district with more than 20 buses on the road.” For many school systems, that question has become increasingly difficult to answer as diesel prices continue to fluctuate.
A Cost-Saving Solution: Electric School Buses
Electric school buses offer districts a different approach. Rather than purchasing thousands of gallons of diesel each year, electric buses operate on electricity, an energy source that has historically been more stable and predictable from a budgeting perspective. Charging can often be scheduled during lower-cost periods, and long-term utility planning can provide greater visibility into future operating expenses than the day-to-day fluctuations of the diesel market.
That predictability is one of the reasons many districts are making the transition. As Patterson explained, “We don’t see the same fluctuation with our electric prices. It gives us a better way to run our routes while being good stewards of resources.”
At the same time, electric school buses can help reduce another source of uncertainty: maintenance costs. Electric drivetrains have approximately 97% fewer moving parts than traditional diesel buses, helping reduce routine maintenance needs and lowering long-term operating costs. When paired with more predictable energy expenses, districts gain greater confidence when planning transportation budgets over the life of the fleet.
This is one reason many school systems are beginning to evaluate transportation through a total cost of ownership lens rather than focusing solely on the upfront purchase price of a vehicle. The question is no longer just how much a bus costs to buy. It is also how much certainty that investment can provide over the next 10 to 15 years.
Through Highland’s Electrification-as-a-Service (EaaS) model, districts can transition to electric transportation while reducing many of the variables traditionally associated with fleet ownership. Rather than navigating vehicle procurement, charging infrastructure, maintenance planning, and energy management independently, districts gain a long-term partner focused on delivering reliable service and greater budget predictability.
No one can predict where diesel prices will go next month or next year. But districts can take steps today to reduce their exposure to that uncertainty. As school systems continue balancing tight budgets with growing operational demands, replacing a volatile operating expense with a more predictable one may prove to be one of the strongest long-term advantages of electric school buses.
