Truckers the latest casualties of rising oil prices

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Truckers the latest casualties of rising oil prices Heating oil prices were the first to spike, now it's diesel fuel's turn.

Source: Portland Press Herald Publication date: Feb 06, 2000

The rising fuel prices that have a financial stranglehold on home- heating oil consumers are now victimizing truckers, forcing some of them to idle their rigs until prices drop.

The price of diesel fuel hit record levels Saturday -- spiking at more than $2 in some parts of Maine. "I've never seen it so high," said Tim Wiscarva, a trucker who hauls a flat-bed trailer for Deco Leasing out of Boston. Wiscarva was at Howell's Truck Stop in Kittery, where the pump price was nearly $2.05 per gallon.

A sudden cold snap, low U.S. oil inventories triggered by heavy demand in Europe and ominous rumors that OPEC will continue production cuts have boosted oil prices to record levels both nationally and in Maine, experts say.

Dale Hanington, president of the Maine Motor Transport Association, said prices have gotten so steep -- increasing by roughly 10 cents a week for the past month -- that soon consumers may feel the pinch when buying produce in the grocery store. For instance, Hanington said, some farmers in Aroostook County can't find anyone to haul their potatoes south. Many truckers who normally wouldn't mind making the trek north with empty trucks now won't go unless they also have a northbound load of goods.

"It's bad," Hanington said. "The prices have gone up in the last month by 40 to 60 cents. Before we started this upward spiral, fuel was about $1.40. Now it's $2 on average, and some places are getting more than that."

The national average, which has been steadily rising over the past year, is currently $1.45, reflecting a fraction of the steadily rising price increases in the Northeast. In Maine, the diesel price has gone up an average of 90 cents just since last June.

At Dysart's Truck Stop in Hermon, the pump price is $2 per gallon. Dave Wright, the petroleum sales manager at Dysart's, said some 18- wheel operators have parked their rigs waiting for a price break. "There's no question, some of these trucks are parked on the side of the road or at these guys' homes," Wright said.

Yet, many independent truckers who have expensive new trucks and are trying to meet their payments simply can't afford to idle their rigs. They have to keep going to help bring in revenue.

They hope they can pick up a load south or west, where they may be able to find cheaper fuel, Hanington said.

Wiscarva, who has been driving trucks since 1971, said he can recall years when it was harder to find fuel, such as in the 1970s. But what's different this time is the incredibly high price, he said.

As a result, Wiscarva is choosy about the freight he hauls. "I'm selective in terms of the price I'm paid to haul it," he said.

The rigs like the one he drives get only 5 miles per gallon. "Forty cents per dollar goes to fuel. That leaves you little for truck payments, registration, insurance."

Hanington said he's been told that the prices should come down in a few weeks, "but by then I'll be seeing people filing for bankruptcy." Some trucking firms are losing as much as $1,000 a month due to the escalating fuel prices.

"It is a very serious problem," he said. "We have talked with many legislators seeing if there's any relief they can give, but I don't see any substantive proposals."

One idea, he said, was to relax the fuel tax. While that would give the transportation industry help, it also would come at the expense of the highway fund, which helps to maintain roads.

The problem has also hit hard in Canada. In Quebec, more than 1,000 independent truckers working for the forest-products industry recently went on strike protesting the rising price of diesel, a fuel that is similar in consistency to home-heating oil.

Gov. Angus King has joined other Northeast officials calling on the Clinton administration to release oil from the nation's Strategic Petroleum Reserve to combat rising oil prices.

Staff Writer Ted Cohen can be contacted at 282-8225 or at: tcohen@pressherald.com Publication date: Feb 06, 2000 ) 2000, NewsReal, Inc.

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-- Carl Jenkins (Somewherepress@aol.com), February 07, 2000

Answers

link

-- (kb8umw@yahoo.com), February 07, 2000.

Thanks Carl. As usual you are johnny on the spot with the news. I wonder when the ripple effect will hit the west coast?

-- David Whitelaw (Dande53484@aol.com), February 07, 2000.

Howdy, Folks.

So, the big question:

Did any large trucking companies stockpile diesel last year? Or have they also gone totally over to JIT supply for their fuel?

I simply cannot imagine a large trucking concern not having some sort of fuel depot set-up over several states for their truckers to go to in an event such as this, especially after the oil crunch of the 1970s. Besides, if you're buying vast amounts of fuel for storage for future use, you'll probably get a bulk discount; you'd still come out better stopping in at the company depot for your fuel.

Or is this wrong thinking? I know nothing about the workings of the trucking industry; can anyone fill me in on the possible existance of this sort of fuel scenario?

Thanks,

Don

-- Shimoda (enlighten@me.com), February 07, 2000.


hey there is no special fuel tanks that trucking coampanies use think about a mid size company with say 400 trucks adverage fuel tank say is 300 gal , thats 900 gal a week per truck , times 400 trucks , now thats a good start ofhow much the company spends on fuel in a week , now figure in the cost of fuel , WOW thats a week ,!!! now think the largest company out in the trucking world has over 10,000 trucks , on the road ,every day!!! i think there figures were about 4,680,000 mil a fill up for the fleet!say they fill up 3 times a week thats 14,040,000 if prices dont fall its going to be a mess lets say for a month 56,160,000 for a month hey why not a year 673,960,000 WOW thats just there fuel!!! have fun with a calcalculator some time , they also have to pay for road taxes , and lets not froget tolls and mantance , and then there is fuel tax wow most stated there going to hit you for a few sents per mile , then ther is the driver he got to get paid , after a while you start to see things can come to a stop real fast if things dont change ...

MONGO

MONGO

-- ron (mongo2@prodigy.net), February 07, 2000.


Shimoda (enlighten@me.com)

Along with JIT came outsourcing. Many trucking firms count on these fuel specialists firms to handle all this for them. Their rigs just show up, tank up, and take off. The firm receives the bills later.Or they are put on smart cards.

Of course this was in the time of cheap and plentiful fuel when some of the younger executives thought, "value for shareholders - we can shave costs not doing ourselves". To this should have been the sage voices of those who have lived through hard times. Obviously retired or pushed out at that point.

Brother in law drives for a local(ish) outfit. They have not had the fear of JIT just yet in this area. But I expect it'll be along presently.



-- pliney the younger (pliney@puget.sound.raining), February 07, 2000.



Fuel shortages might be y2k effects, might not, maybe just the cold winter, I dunno. We say be ready for any emergency, not just Y2k. Last year, I was saying the same:

"Second, I suspect long-distance transport will be scarce and valuable. We won't waste it on merely diversifying a diet, and will instead use it to supply a basic diet. It's worth more to get beans to NY than to get oranges to someone who HAS beans. So here in the PNW we'll probably be eating lots of beans and potatoes, but no oranges. In Florida they'll have oranges and rice, and no beans. That could be done simply by hyper-taxing what fuels we have, and food-shipping would be priced out of the fuel market. A few, of course, will pay any price, just as in England during the war you might see an orange or two a year."

Quit hauling potato chips, save the fuel, just haul the potato. Time to rethink our priorities.

-- bw (home@puget.sound), February 08, 2000.


pliney has it correct re. the outsourcing of fuel supplies.

In the computer business, before you outsource something critical, you are well advised to require that an iron-clad guarantee of availability be written into the contract, with the penalties being significant. Example: you require that the vendor guarantee your customers 98% uptime within any x-hour period, or they owe you x thousand per hour of downtime. The point is to force the vendor to deal with making darn sure your computer application (or diesel fuel) is available. Unless we have a driver or supervisor from a major carrier reading this, I doubt we'll know if those petroleum logistics contracts have such stipulations.

None of which addresses the smaller trucking companies or the independents who will find it most difficult to pass along the cost/mile increases.

Now, if this diesel availability situation gets a lot tighter than it already is regionally, it seems like the railroads may also be affected. Because those engines are diesel generator sets, essentially. Big, thirsty gensets! For example, if certain yards in the Northeast cannot get reliable diesel delivery, that RR would have to let that train sit rather than risking blocking trackage.

Does this RR question also seem a realistic scenario?

-- Redeye in Ohio (cannot@work.com), February 08, 2000.


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