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Skyrocketing fuel prices and severe winter weather during the first quarter didn’t prevent Union Pacific Corp. from increasing net income 24 percent year over year to $639 million, or $1.29 per diluted share.

“We started the year off strong by achieving record results in the first quarter,” said UP Chairman, President and Chief Executive Officer Jim Young during an earnings conference held yesterday. “We saw volume growth in all commodities and effectively leveraged that growth by running a safe and efficient network despite spiking fuel prices and winter weather challenges across most of the nation’s rail network.”

Total operating revenue rose 13 percent to $4.5 billion, operating income increased 15 percent to $1.1 billion and the operating ratio improved 0.4 points to 74.7, a first-quarter best. UP executives attributed the improvements to volume growth, improved operating efficiency and pricing gains during the quarter.

Total volume climbed 5 percent, with each of the six commodity groups registering growth in both volume and revenue. Price increases and fuel cost recoveries also helped boost revenue.

Volume growth was led by chemicals, which jumped 10 percent, followed by industrial products, which rose 9 percent. The agricultural products, automotive, energy and intermodal categories each grew 4 percent.

Measured by revenue, intermodal soared 15 percent to $793 million; industrial products grew 15 percent to $690 million; energy jumped 13 percent to $952 million; chemicals climbed 13 percent to $664 million; automotive rose 12 percent to $342 million; and agricultural products improved 11 percent to $807 million.

On the expense side, total operating costs rose 13 percent to $3.4 billion compared with first-quarter 2010. Higher expenses were due in part to wage and benefit increases as well as costs associated with growing workforce levels in response to volume growth. After labor costs, fuel expenses — which skyrocketed 42 percent to $826 million— were by far the biggest cost-driver for the quarter, said Chief Financial Officer Rob Knight. Fuel costs negatively impacted the operating ratio and earnings by 2.4 points and 8 cents per share, respectively.

However, even when factoring in higher fuel prices, UP executives remain optimistic about future growth, particularly in the second half. Uncertainties that may affect growth include the disasters in Japan and the impact rising gas prices have on consumer demand and the overall economy, they said.

— Julie Sneider