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Last week, diesel began flowing through Kansas City Southern's pipeline in Heavener, Okla. The newly built fuel-supply system is designed to save the Class I seven cents per gallon — or $2 million annually — based on 3 million gallons purchased monthly.

Shortening the distance between the railroad's fuel supplies in Kansas City, Mo., and Shreveport, La., the pipeline will enable KCS to obtain lower Gulf Coast fuel prices, increase diesel availability and reduce the number of tank cars moving across the Class I's system, according to a prepared statement.

KCS began building the pipeline in September 2003 after a Lake Charles, La., fuel supplier — who supplied 60 percent of the railroad's fuel — closed a loading facility. KCS officials chose a new fuel supplier near Heavener because other online suppliers had limited capacity, and offline sources would increase diesel and transportation prices.

Next month, KCS will install a loading rack in Heavener to complete the pipeline project. In the meantime, KCS officials are negotiating a contract for a similar fuel-supply system near Shreveport, which would be completed by second-quarter 2005.