An attempt was made to reduce fuel costs of a diesel-electric locomotive by operating the locomotive in a periodic manner, as opposed to operating at a constant velocity. The periodic operation consisted of accelerating the locomotive in a high throttle position and then deccelerating at a low throttle position. An SD40 Locomotive was modeled to test the periodic operation. The periodic operation was actually found to offer no improvement in fuel performance over that of constant velocity operation. A modification to the diesel engine that takes advantage of the periodic operation is suggested that will give a better fuel performance. The modification to the engine would not be possible with constant velocity operation. With the modification, the periodic operation was found to save fuel over the constant velocity operation. A controller was then designed to implement the periodic operation. The key component of the controller is an observer to determine unknown hill forces. The controller was found to work successfully. / M.S.