Ongoing Fuel Price Increases

This Editorial appears in the June 8 print edition of Transport Topics. Click here to subscribe today.

Retail diesel prices in the United States hit their highest mark since December, as increasing crude oil costs work deeper into the fuel supply.

The average gallon of diesel cost $2.352 in last week’s national price check — 33.5 cents more than the four-year low reached in mid-March.

Gasoline is going in the same direction, having risen 87.1 cents a gallon since Dec. 22 to stand at $2.524. The last time that was the national price of gas was in late October. 

Crude oil again is flirting with $70 a barrel on world markets — more than twice what it cost in mid-February — as inklings of a U.S. economic recovery prod investors around the globe to stock up.

This is bad news for trucking, which continues to suffer through a freight drought, despite reports that sales are improving at the retail level and some manufacturers are starting to slowly ramp up operations.

It’s hard enough to deal with soaring fuel prices when business is at normal levels. To pay sharp increases in the current freight environment could lead to another wave of carrier failures.

The price rise is coming during the warm season, when diesel doesn’t face competition from home heating oil, so diesel hasn’t risen as quickly as gas. Gas demand is up because summer driving has begun.

The Department of Energy reported that U.S. distillate stocks, from which diesel and heating oil come, exceeded 148 million barrels in late May, compared with less than 110 million barrels in May of last year. Yet, even if crude doesn’t spiral higher, trucking should expect more price increases as the year wears on.

Last week came news that the Highway Trust Fund cupboard is almost bare — again. Administration officials told Congress that the fund is likely to run out of cash by mid-August unless action is taken. Sen. Barbara Boxer (D-Calif.) said White House staffers told her the fund would need as much as $7 billion to keep it solvent for the rest of the calendar year.

Unless the money is found, improvement projects around the country could be halted. In the short term, the trust fund needs more cash. In the long term, Congress needs to pass a well-funded and comprehensive highway bill.