— Misti Strader/Tribune-Courier || Regional Love’s fuel truck driver Woodson Gray refuels supply tanks at the Love’s Travel Stop and Country Store in Calvert City. Love’s had the lowest price gas in the stations surveyed last week by the Tribune-Courier at $3.38 per gallon. That’s 11 cents per gallon chaeper than other area stations.

High cost of fuel cripples trucking industry

By Misti Strader
Tribune-Courier News Editor
mstrader@tribunecourier.com

CALVERT CITY – If you own a vehicle, you probably know all too well the pain of having to shell out a fist-full of dollars every time you drive up to the gas pump.

With gas prices soaring to $3.50 per gallon and above, consumers are looking to cut back on expenses. For many, that means choosing to carpool, utilizing public transportation or simply choosing to drive fewer places.

For truck drivers, however, driving is not optional, it is a way of life, and the exorbitant cost of fuel is not only burdensome, it’s downright life-threatening.

Once again, the U.S. average diesel price increased to a new record high last week, although the weekly gain was somewhat lower compared with the robust pace reported in the prior week.

The U.S. average price increased to $4.14 per gallon, up by 8.4 cents, compared to the 10.4 cent increase of the previous week.

Prices increased in all regions of the country, albeit at a slightly slower pace than the previous week.

The nation’s truck drivers are now paying $1,000 or more to fill up their fuel tanks, and the ripple effect is being felt in nearly every aspect of the nation’s local economies.

So, what exactly is driving diesel prices? According to a statement issued by the Energy Information Administration (EIA), the answer is simply a matter of supply and demand.

“Since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline all year round because of high worldwide demand for diesel fuel and other distillate fuel oils, especially in Europe, China and the U.S. and a tight global refining capacity which is unable to meet the demand.”

Also, the EIA reports the transition to low-sulfur diesel fuel in the U.S., affects diesel fuel production and distribution costs.

Another costly problem at the pump for consumers is “futures” pricing by fuel providers.

According to Woodson Gray, fuel truck driver for Love’s Travel Stop and Country Store, stations often charge more for gas than what they actually paid for it.
“As crude oil prices go up, Love’s gas stations will typically hold their purchase price on gas for a few days before increasing costs, whereas other stations will often purchase fuel and sell it based on a futures price,” Gray said.

Futures pricing means that consumers pay an estimated price for fuel, rather than the actual cost, and this drives prices up in local markets.

Gray said fuel providers could help consumers save money if they would only increase rates as their costs for re-purchase went up, rather than charging future prices for gas bought at a cheaper price.

Gray did note, however, that if there is a silver lining to this cloud, it’s that Marshall Countians are paying less at the pump than most consumers within a five-state area.

That’s not much consolation, though, for area truck drivers who are trying to stay afloat in the midst of a sinking economy.

John Rose, owner of Rose Rock Yard in Benton and now certified commercial airline pilot, said sky-rocketing fuel prices have certainly affected both of his careers.

“I started trucking in 1999. Back then, you could buy fuel for $1 per gallon,” Rose said. “It cost me around $350 to fill up my semi then; now you are talking about $1,200 to fill up the same truck– an increase of nearly 400 percent.”

Rose said while he has tried to absorb most of the cost of fuel increases over the years, some has had to be passed down to customers.

“I used to offer free local delivery,” he said, “but with gas nearing $4 per gallon, I just can’t afford to absorb those kinds of expenses.”

Rose said he now charges a minimal delivery fee to help cover the cost of transportation and product placement.

Another important aspect of being able to continue operating, he said, is to keep logistics efficient and to a minimum.

As of right now, he said it costs roughly 65 cents per mile to operate his semi, not including maintenance, tire, licensing or insurance costs.

Rose said he has had to make changes in the way he does business. “It used to cost me roughly $2 to haul per load mile. Now, that cost is somewhere near $3.50 per mile. I don’t run all over the country anymore, either. I wait until I can get a certain number of deliveries and pick-ups in a similar direction. Logistical planning is far more important for successful operation than it ever has been before.”

Independent drivers who haul products for other companies are perhaps the hardest hit, Rose said.

“Typically, those drivers count on making money on their mileage, since they are not making any profit on the products they are hauling. When fuel costs go up, their profit goes down.”

Sharp and sustained rises in diesel prices are squeezing businesses that rely on trucks, especially companies locked into fixed contracts with their customers.

“It’s hard to predict a 100 percent increase in a year’s time,” Rose said. “If you try to calculate that kind of increase and add it in to your contract price, the customer is not going to be willing to pay that, and they are going to go somewhere else.”

Rose is also a commercial airline pilot. He confirmed that rising jet fuel costs are taking their toll on the transportation industry, as well.

“Two years ago when I obtained my private pilot’s license, aviation fuel was $2.70 per gallon, and now, fuel is over $6,” he said.
The industry suffers overall when airline tickets go up because the number of patrons willing to travel goes down.

So, what’s the solution? Rose said the answer is, at least in his opinion, an easy one. “We have to become more self-sufficient in America,” he said. “We have a failed energy policy which states that we will not drill for new oil and that we cannot build any new refineries. Trucks run this country, and as long as we are solely dependent on other nations for our oil supply, this is what we are going to get.”

Nationwide, truckers are striking in an effort to draw attention to the crippling effect exorbitant fuel prices is having on their industry.

Legislators are scrambling to find solutions to ease the economic crisis, including a plan presented by presidential candidate John McCain which suggests a “gas tax holiday” from Memorial Day to Labor Day.

There is no end in sight to the increases, reported the Department of Energy. So, for now, it is a wait-and-see game for Americans–wait to see how much gas is going go up, and see if you can afford to buy it.