This Editorial appears in the March 14 print edition of Transport Topics. Click here to subscribe today. Fuel prices have now jumped so high that we all need to pay close attention. Not that we can do much about these skyrocketing prices, except pay and grumble.
For 14 straight weeks now, the U.S. diesel average has risen. In the past two weeks alone, it has jumped a fraction less than 30 cents a gallon and now stands at $3.871, as of March 7, its highest level since October 2008.
Trucking’s primary fuel is now on average 96.7 cents a gallon than in it was a year ago. Because trucking burns more than 650 million gallons of diesel every week, on average, the industry thus spent about $630 million more for its fuel last week than it did in the comparable week in 2010.
While the nation’s large fleets will recover a chunk of that extra cost through fuel surcharges, all studies have shown that virtually no fleet is reimbursed for all of its extra costs, thanks to such things as dead-head miles and fuel for refrigerator and auxiliary power units.
Smaller fleets often don’t have the leverage to force shippers to pay the fuel surcharges or to pay adequate surcharges.
And now we hear that the latest fuel spike, coming just as fleets have gained some pricing leverage with shippers, is complicating carriers’ efforts to recoup what they lost during the recession. Carriers were forced to keep rates low over the past two years in order to attract what little business was available (see story, p. 1).
As one industry consultant told us, fleets are likely to “have trouble getting both larger fuel surcharges [resulting from the big run-up in diesel] as well as higher shipping rates. I can see this driving many companies out of business.”
That could spell still more trouble for shippers, who are already feeling the pinch caused by the shuttering of a number of fleets that were unable to weather the financial storms caused by the recession.
Once again, we find ourselves and our economy held hostage by fuel prices that seem driven far more by investor nerves and speculators than by supply realities.
We need to hope that the fuel-price spiral will run out of steam before the high cost of diesel and gasoline takes the air out of the national recovery that is just now showing itself in many sectors of our economy.
