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Diesel Prices Spike Early, Hurting Truckers

Fuel

It seems everybody has a story about high fuel prices, but not everybody feels the same level of pain at the pump.

If you’re a long-haul trucker, it costs $1,103 to fill up those 280-gallon fuel tanks with diesel that costs $3.94 a gallon. That figure seems to slow down the stories from most of the passenger vehicle drivers who think they’ve got it bad.

Michael Gully, vice president of Quincy Gully Transportation Inc., does not expect today’s diesel prices to change the average fuel surcharge of 50 cents a mile.

“In the short term, I don’t know that the price will affect the industry as much as it did the last time” prices spiked above $4 in mid-2008, Gully said.

That’s because lots of trucking firms that were on the fringe went out of business a few years ago.

“We’ve got just a little more demand right now than we have truck capacity,” Gully said.

That could change if fuel prices keep climbing to the $5 or $6 level, when Gully believes the U.S. economy would stall. He said when fuel prices spike, consumers lose some of their spendable income and cut back on purchases. That causes a contraction in the economy and trucking demand falls off.

“It’s a domino effect. I’ve never seen fuel go up, and it not affect the economy,” Gully said.

Analysts point to a host of reasons for the rising price of fuel. Brent crude prices closed Tuesday at $121.55 a barrel. While that is down from a few days ago, it is well above prices a month or two ago. A weak dollar also makes oil prices climb.

Oil futures also have sold at higher levels on fears of the European debt crisis and Iran’s threats to disrupt oil shipments through the Straight or Hormuz. Rising demand in China, India and other developing markets also keeps oil prises rising.

Gasoline formulas must shift to summer blends, creating a temporary shortage in supplies that forces prices higher each spring.

People at gas stations just know they can’t control the prices.