New Heights for Diesel Prices

The new millennium picked up where the old one left off, with diesel prices heading skyward. Fuel costs reached new heights in 2000, and the impact was felt throughout the economy, especially by those who operate or build big trucks.

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After starting the year at $1.309 a gallon, the national average climbed more than 36 cents a gallon to an all-time high of $1.670 a gallon on Oct. 16, according to the federal Energy Information Administration. As the year drew near a close, the price retreated somewhat, standing at $1.515 on Dec. 25.

The run-up began in the spring of 1999, when the price of crude oil was about $10 a barrel and diesel had fallen to 95 cents a gallon. The low prices spurred members of the Organization of Petroleum Exporting Countries to agree on production quotas aimed at reducing the supply of oil.

The price of oil and, with it, the price of diesel fuel, continued to rise inexorably, with only short-term reversals, throughout 2000. By fall, oil was above $35 a barrel on the merchantile markets, gasoline hovered in the $1.65-a-gallon range and diesel fuel was on track to the all-time high of $1.670.

Along the way, the price of diesel was a factor in repeated trucker protests, a presidential decision to release some of the Strategic Petroleum Reserve and the failure of hundreds of small fleets and owner-operators. It also exacerbated the problems caused by an excess of used trucks that was partially the result of two successive years of record sales of new trucks. However, much of the blame for declining truck sales went to the rapid rise in fuel prices that caught buyers unaware and forced many to get out of the hauling business — putting still more used trucks on the market.

By fall, a finance company representative estimated the truck repossession rate at 28% and said both fleets and used truck dealers would struggle with falling values that put the price of a late-model used truck below that of a pickup truck.

For the full story, see the Jan. 1 print edition of Transport Topics. Subscribe today.