Fuel Choice, Budgets & Fresh Ideas

July 20, 2026

Will costs keep going up for school transportation operations in the 2026-2027
school year? It depends. Several factors impacted this past year’s school transportation budget, and the most notable line-item increase was likely to your fuel costs.

New school district budgets are rolling out this month for most operations, and I’ve been told that transportation department budgets remained flat or down in most cases. What is going to change if you don’t take action to defend against future fuel volatility? More cuts? Ugh.

I recently spoke with an executive at a private school bus contractor, who was surprised to learn that school districts rarely use fuel hedging. He explained that the strategy helps create more predictable costs and protects his company and customers from sudden fuel price swings.

A transportation director I spoke with described fuel hedging as gambling, but I see it differently. It’s a practical way to manage costs and reduce budget uncertainty. While fuel prices can rise or fall, recent trends suggest increases are more likely than decreases.

School districts should consider this strategy because fuel price volatility directly threatens core operations and educational priorities in a way that private companies can often pass on to customers. Recent years have shown districts scrambling, consolidating routes, dipping into reserves, deferring maintenance or fleet purchases, or cutting programs, when diesel fuel spikes.

Hedging treats fuel cost risk like insurance: You pay a premium (in the form of potential opportunity cost or fees) for protection against worst-case scenarios. For entities with predictable, high-volume consumption like school buses, it aligns well with annual budgeting cycles.

Will fuel volatility change the way school transportation operators consider purchasing new school buses? I predict we will see higher consideration for alternative fuels like propane and electric instead of diesel or gasoline.
Cypress-Fairbanks Independent School District in the Houston, Texas area—the largest school bus operation in the state—has no current plans to purchase diesel school buses as it focuses on propane and electric, said Bobby Williams, assistant director of transportation for fleet maintenance.

According to an STN readership survey of 636 subscribers conducted in April, respondents indicated purchase intent of new diesel buses, engines and components at 26 percent, new gasoline buses at 11 percent and new alternative fuel buses and infrastructure (propane, electric, CNG) at 10 percent.

The school bus and larger commercial truck industry will need to adjust to the EPA’s 2027 heavy-duty emissions rule that tightens nitrogen oxide and particulate matter emissions limits. The EPA is expected to release its revised final rule this month to address increased production costs tied to major engineering redesigns and, more specifically, warranty costs.

The EPA is also expected to announce the return of the five-year, $5-billion Clean School Bus Program, which has been on hiatus since January of last year. The agency indicated in an RFI published earlier this year that it was considering adding biodiesel and renewable diesel as fundable fuel types.

Another tactic to address rising fuel costs is the use of technology. Have you leveraged artificial intelligence (AI), data analytics and your routing software partners to help? AI-powered routing software analyzes traffic, weather, construction, and student address data to create the most efficient, fuel-saving routes. The integration of onboard tablets allows for turn-by-turn directions
and student manifests. These systems adapt in real time, helping buses avoid delays and improve on-time performance. These systems help cut fuel use, reduce
emissions and improve operational costs.

Fleets should consider utilizing more data-driven decision making in their operations. AI platforms collect and analyze transportation data to identify trends, inefficiencies and improvement opportunities. Dashboards visualize everything from ridership to route efficiency to behavior incidents, helping administrators make informed decisions. Improved operations, better budgeting and resource allocation, and stronger alignment with academic goals. By leveraging AI and emerging technologies, school districts are turning the daily commute into a strategic asset.

The road to and from school can be a dynamic, data-rich and fuel-consuming journey, but it’s all mission critical for any school transportation operation. Economic hardships force us to adapt and transform the outcomes should enhance performance, safety and empower transportation teams with the tools they
need to succeed in the future.

I recommend considering fresh ideas and leaning on your business partners as you look towards the 2026-2027 school year and beyond.

Editor’s Note: As reprinted from the July 2026 issue of School Transportation News.