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Although all railroads are impacted by rising diesel prices, most have hedged a significant portion of their first-quarter fuel exposure, according to a recent statement from Deutsche Bank Securities Inc.


Among Class Is, CSX Transportation and Union Pacific Railroad might be affected the most by escalating prices in the quarter because CSXT hasn't hedged any fuel and UP has hedged just 7 percent.


By hedging, a railroad is able to obtain a current price for future fuel consumption.


However, higher fuel costs should be a short-term problem, and the rail industry's outlook and investment thesis remain favorable, Deutsche Bank said.