High Fuel Costs Threaten Bankruptcy for Truckers
At $1,000 a fill-up, independent drivers suffer, and costs to consumers rise
A couple hundred truckers, after driving their rigs in a horn-honking circuit around Washington, D.C., last week marched on the Capitol with pleas for Congress to halt oil commodity speculators, open more U.S. fields for petroleum drilling, and even cap the price of fuel. A deluge of rain had drenched their rally on the lawn, but the reality inside the domed building, it turns out, was far more dampening to their cause.
It appeared there was little that lawmakers or the Bush administration could do—even if they were willing—to quell the stampeding global oil market. The average price of gasoline has hit $3.60 per gallon, up 15 percent just since the start of the year. But the run-up is particularly severe, and the situation grave, for the industry that delivers consumers their food, clothing, and other goods. Trucks run on diesel fuel, a commodity in great demand globally just when clean air standards have made it harder to refine. The price has shot up nearly 25 percent since January to a $4.18-per-gallon average, up 50 percent in a year.
With the cost of a fill-up for an 18-wheeler now well over $1,000, fuel surpasses labor as the biggest cost for some trucking firms. Big companies face falling profits. Small and independent truckers, some 20 percent of the industry, face devastation. Trucking firm failures jumped to "catastrophic levels" in the first quarter of the year, reports industry analyst Donald Broughton. He estimates that 42,000 trucks, or 2.1 percent of the nation's capacity, were idled in the first quarter—with nearly 1,000 companies going bankrupt. Broughton says the cash-flow crisis caused by unrelenting weekly diesel price increases has truckers looking to borrow money for basic operating expenses—license tags, insurance, and, of course, fuel. The credit-crunched bankers are cutting their losses and repossessing rigs.
In all, it is the worst crisis in the industry since the 2001 recession, but with an ominous twist. Thanks to the falling U.S. dollar, Russia and eastern Europe are eager to buy those idled trucks—eliminating the rigs from the U.S. marketplace for good. That may seem to matter little in the slowing U.S. economy, where there still are too many trucks chasing too few loads. But when U.S. demand picks up, there will be fewer trucks—and higher shipping prices. "I won't tell you that that is necessarily a bad thing for truckers," says Bill Graves, president of the American Trucking Association, which represents the big firms. "But when the price of transportation goes up, the price of goods goes up. This is an insidious cycle we're in right now."
Slow down. Trucking companies are doing what they can to cut fuel costs. Con-way Freight, one of the nation's largest trucking firms, is turning back the electronic devices that control speed in its fleet from 65 miles per hour to 62 mph. The company estimates that by slowing its drivers, it will save 3.2 million gallons of diesel fuel a year. At the current price, that comes to more than $13 million per year.
The American Trucking Association would actually like to see a nationwide speed limit of 65 miles per hour, but Graves admits that no politicians so far are taking up the cause. "You'd burn less fuel, produce less greenhouse gas, and save lives—a win, win, win," says Graves. "Obviously, it makes too much sense to get a lot of traction." But the idea is not likely to please the independent truckers, for whom speed can be the only advantage. Big trucking companies can negotiate better fuel prices by buying in bulk and can deploy large fleets to minimize "empty miles," the return trips driven without cargo, which kill the economics of the small trucker. Broughton sees an "ever widening gap between the 'haves' and the 'have-nots' in the industry" and expects trucking to eventually be winnowed down to a few big players that can dominate the market.
Michael "J. B." Schaffner of Nocona, Texas, can attest to the pressure. He hauls for a small company, trying not to let his 250-gallon tanks run too low to reduce the cost of any single fill-up. But it just means he has to fuel more often. A few weeks ago, Schaffner said, "I woke up and said a prayer" and started urging fellow truckers to speak out. He helped organize the rally on the Capitol. He has heard that the market sets the price and there is little lawmakers can do, but he says he is looking for a sign that they care. "Every single person in every part of the line [that distributes goods] is also a consumer," he says. "It is affecting all of us."
Reader Comments
Truckers
What do they mean Congress or the White House can't do anything about the price of oil? BULL! If need be, put price controls on the price of oil. What gives the oil industry the right or privilege to make $12 billion every three months. For 2007 they claim they made over $40 billion profit, they probably made more but with their high priced accountant they hide the rest or find a way to put some money in off-shore accounts. Let's not forget that Bush and Cheney are CLOSE to the oil industry that is why they get huge tax deductions. If nothing else cut all tax deductions for them...as if they needed it.
Fed-up taxpayer
fuel costs
Speaking of high fuel costs, it's outrageous! I feel for the truckers, especially the independents who pay for deisel out of their hard earnings on top of paying their other bills and supporting families, if tthey have one.
We often wonder if this situation will ever see a let-up, or at leas level off for a good while. As for the gasoline costs, this so-called ethanol that fuels hybrids etc. is a real farce! Dare it be said that a great many Americans know that car manufacturers for a number of years have had the technology to make autos that get 50 to 60 mpg. Come on people, we've been fed a pack of lies for decades on this issue.
The only thing ethanol is doing is gouging the hell out of the food market. People are starving because a large quantity of corn goes for this so-called "help us get off foreign oil dependance" bit. The only thing that's going to turn things around is a change of heart in a whole lot of greedy people, we Americans and the overtly rich oil sheks of the Arab countries as well. Quite honestly, my friends, this is not an abusive response; rather a wake up call to reality.
truck gas price
can costs be controlled by using rail transportation?
Long term solutions
Why can't we get fuel from our coal. We have enough coal to last 256 yrs. We need long term solutions. The price of oil is like anything else supply and demand. We need to build more refineries, drill in Alaska and do away with the speculators. Near term lower the speed limit and do away with the speculators. Congressman John Shimkus has the right idea but no one is listening in Congress. Listen to our truckers they supply most of the goods to the people of this country. Thank You
The War that has to be Won first is Energy you stupid politicians
These politicians that we have elected, these politicians, both Democrats and Republicans that we have elected, and in some cases, keep going back, it is our own doing. We deserve what we are getting from Washington.
So here is an idea, vote them out, all of the incumbents, vote them out !!!. We don't need checker players that have let power and greed consume how they think. And get this, these politicians come from our society, they are a reflection of us. So a point here is, just like most of us who spend more than we make, and we live off credit cards, these politicians that come from the same fabric, do the same when they get into office, using our tax dollars.
First, they have let us into this ambush, not allowing for domestics increase in production/supply and putting us at the mercy of foreign oil, i.e. that coming from the Middle East because they only know how to play checkers. Brazil has a model that works using sugarcane to make ethanol, and these idiots come up with using corn and putting tariffs that don't allow for more ethanol to come in to the U.S. We are buying the oil from the same sources who funds the the Muslim Terrorists. These are the same politicians, who did not have the forward thinking to require the airlines to have the proper security measures, the model the Israels had to put in back in the 60's and 70's, when their planes were being taking over. Had our politicians taken steps to prevent airplane hijackings, those planes would not have been so easily taken. Had the CEO of those companies done the same, on their own, those planes would not have been taking over.
Second, this country is in a financial mess, a war in Iraq (it didn't go into North Korea, and hell they do have the bomb and support terrorists), that was not necessary and is not being paid for, a war being funded by borrowing the money it needs for it, a country that takes in 2 trillion and spends 5 trillion, borrowing the rest mostly from the Middle East and China. And by the way, Russia, the one that was defeated 20 years ago by outspending them on defense, it's now 20 years later, they are debt free and can afford anything they want in defense and space programs, and they have oil and natural gas etc. Bush/Cheney are two sorry performing individuals, whose family members do not serve in the military, are street sense incompetent, remember stupid is as stupid does, and financially, they could care less how much they have to pay for a gallon of gas or a gallon of milk, if they are so damn patriotic, donate your millions to the Veterans that need care for the rest of their lives, and put yourselves to live on a budget. But they have been aided and abetted by the rest of these sorry performing Senators and Congressman that has put this country in this sorry mess we find our selves in. The terrorist have no Air Force, have no Navy, no standing Armies with tanks and artillery, and long logistical tail to support it, and here these idiots have provided them with the funds for a situation that has no end. And they have made it possible for Iran, Venezuela, and those that get oil revenues to buy anything they want , i.e.. a modern army with the latest technologies from Russia and China , our enemies, you stupid, overrated title holders to public office. Just like your never going to rid the world 100% of drug users, as long as drugs are available, your never going to get rid of someone that decides to commit suicide in the name of a cause and blow themselves up and take you with them when the resources they need are available. Just like in Vietnam, were the wrong tactics were used to try and win, and there was no dominoes that fell that consumed the world, what these two checker players have done is make Iran stronger in the region, didn't you learn from Jimmy Carter, drive this country into debt, and a total bill for these war that has yet to be determine, put the Veterans at the mercy of these never having served in a forward area piss ants, to fix their problems, put our oil based economy at the mercy of these double dealing Arabs, and make it possible along with these Federal Reserve bankers and Wall Street slime, that could never acquire enough money in their lifetime, so that foreign governments can now own our country's assets. Just one more, the failure of our fellow citizens, those individuals in government, who have failed to reign in the corruption with our tax dollars going for this war. And make the bastards reimburse us for the cost of the war, I want my tax dollars put back in the Treasury. First, I want some of that money to go Veterans in need, second for education, college grants for those that deserve it, and for vocation training for those that deserve it. Third, for technologies that will get us on the road to less oil for transportation, anything left over to entitlements programs. And get the entitlement programs funded.
Hey, just vote them out, and tell everyone that will listen to do the same, maybe with new blood and some individuals with morals and ethics in their bloodstream, we can get this situation going in a different direction. And don't demand of the politicians what you don't demand of yourselves, isn't that fair?
lawmakers can do something
wallstreet is the biggest profiter in oil not the big oil companies
we remove futures from the market or at least make them take delivery of the product we will see a minimum of $1.50 reduction then there are other ways our government can reduce it even more we should not pay anymore then $2.00 for gas or diesel right now bottom line!!!!!
revolution is coming in the usa real soon and when it does look out!!!!
65 miles per hr
trucking is very versitile short haul and long haul
going 62 or 65 mph on a short haul pulling heavy loads and climbing hills will do nothing for fuel economy get real ATA bunch of fools!!!!
Price controls on oil
Price controls are the absolute last thing we need. Does anyone know the history of price controls on energy... until '92 we had price controls on certain natural gas wells and oil prodcution. In '92 every control was lifted. So what did we learn from 50 years of price controls? Well from the 30's until the late 70's we had price caps. What did we get with price caps? We got shortages of natural gas and oil prices soared. In 1978 the NGPA was enacted by Congress to again control prices. What did they do, well to stimulate supply they put price floors on natural gas and associated oil production. What was the results... HUGE surpluses of natural gas and some oil production here in the United States. Again in '92 all controls were lifted in the U.S. That was good news for consumers as energy prices actually declined due to market forces rather government regulation. This surplus ended in 2002, but from '92 to '02 prices declined dramatically in both real terms and even more dramatically in inflation adjusted terms. In the late '90's, a barrel of oil was selling for under $10. Where was everyone complaining about the low prices? Companies were folding overnight as their costs exceeded market prices. Where were the bleeding heart liberals? They were no where... and what is worse from '92 to current Congress and the President have sat on their thumbs doing nothing. It doesn't take a genius to have seen the looming crisis, but instead of doing something to break our dependence on oil Congress and the President did ZIP, nada, zero. And they simultaneously imposed more regulations on the industry and took vast tracts of land off available lands for drilling. HOW STUPID can these people be? We don't learn anything from the past and we sure as hell don't understand basic economic principles. So instead of resolving extremely difficult problems Congress and the President came out with slogans and stupid comments about price controls and windfall profits. It is the morons in Washington need to understand the problem and commit to solving it. And the public has to be educated about the industry... just blaming the oil industry for high prices feels good, but does not deal with the underlying problem which is not shortage of crude, but shortage of vision and leadership on this issue by politicians. Oh by the way this is the 33 time Congress has looked into price fixing by Big Oil... the previous 32 investigations found zero Big Oil gasoline price fixing or manipulation (I am talking about investingations in the last 30 years, not Standard Oil market manipulation) Enough said
Congress simply doesn't understand anything
Do any of these people understand why businesses are in business? Seriously! The questions being asked are so stupid it is hard to believe these people are well educated. To ask the "Oil Companies" why they are not investing more in alternative to oil... to suggest they have a responsibilty to do this is so absurd I can''t believe it was asked. First why do you think they call themselves Oil Companies? Any guess? Because they are in the oil industry... why else. And to ask why they are not spending more on alternative fuel sources is an oxymoron. Second, no company has an obligation to solve the countries problems. And to ask why oil companies haven't done more is like asking the airlines why they are not developing teleporters like on Star Trek. Companies may want to invest in alternatives, but to somehow suggest they have an obligation is ridiculous. Where do we find these uneducated politicians? They don't understand anything about the economy and yet they are the clowns responsible for overseeing industries that are extremely complex with many unforeseen consequences for Congress stupid ideas. Ethanol legislation is barely a year old and is being found to have significant unintended consequences in food prices... OOPS. We are at the mercy of people who have no idea what they are doing. For the first time in my life I am becoming embarrassed with our country. Our issues are becoming increasingly complicated at an accelerating pace. If we don't get intelligent well-educated politicians in Congress god help us.
Rising Diesel & Gas Prices
It doesn't take a Rhodes Scholar, to figure out the rising diesel and gasoline prices,
We paid the prices at the pump, and we helped the Oil companies, make their
140 billion dollars in profit last year. They are laughing at us all the way to the bank.
saying: "We fooled those suckers, last year, just think what we can do this year, by
telling the american public, that the price of a barrel of oil is $120.00, and next month, it's going up again!" My theory is, If for one day or maybe 2 days a week, if
everyone would not buy gasoline or diesel, what kind of profit would they make then. I think we as americans should have a say so, in what's happening in our country. We don't have any rights what so ever. Russia is communist. But, they
have more freedom than americans do. This is supposed to be the land of the free. I'm sure our forefathers are rolling in their graves, with the way this country is handling thing. Wake up America! Let's do something about it. We can complain all day, and blame everything on everyone else. Let's get going and take our country back. Let's stop lineing the pockets of the big Oil companies, let's stop
paying the high salaries of the congress, and senates.
Time...
WOW!!! - some of ya'll are writing a small book about this stuff - where do you find the time? All this in addition to the weather changes and the Middle East and the war going on... I can't see any of this getting any better and I am not a pessimist, just a realist. Or if it does get better economically, politically, environmentally or even philosophically - it will only seem better for a time (like while one man is in the Chief place of global government power) so that it gives the illusion that Peace is finally reached and the economy is going to be fine. Then the truth will be told and everyone who was blindly following this man will realize that no man (or woman) is a mere mortal but that we all have a soul that will live beyond this temporary existence on this small planet so we better know our Creator. John 3:16
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alternative fuels
Drilling is all well and good but won't solve the problem merely provide a remedy. What we need is a massive mobilization toward algae based bio-fuels, which yield 10,000 to 20,000 gallons per acre per year depending on the strain of algae. The problem,as usual, is money and politics. Algae is not a comidity and therefore not very lucrative for investors and speculators. At least not yet. The only long term concern wouldf be the allocation of water resources. Unless, of course we used salt-water based algae. We also need to fundamentally changer the way we live. Oil is not needed merely for transport. Just think Asphalt roofing shingles, plastics made from petroleum. As the price of oil　increases so will everything made from it. In the mean time if you can take a commuter rail, car pool and if you have a diesel vehicle convert it to run on veggie oil. See www.greasecar.com www.vegpoweredsystems.com
I failed economics too
I agree with Ann. The government should limit the price of gas. Actually they should limit the price of everything. How about one dollar for any good?
Those greedy oil CEO's are making too much profit, causing my 401k to sky rocket and now I will have to pay more taxes when I retire. We should force them to put all of their profits into searching for new oil. But only in places that won't harm the environment. Which I guess is nowhere. Maybe we should force them to invest in alternative energy sources. I'm all for false promises in the short run.
Get Them Off the Road
No complaints from this consumer about the price of gas. What a joy it is to cruise down Route 495 in Massachusetts without the usual heavy trucker traffic. The ones who are out there are slowing down and obeying traffic laws, finally.
Get rid of these useless overgrown monoliths and get back to rail!
We'd all be a lot better off.
Rail. Right down the grassy median strip. Think of it. Fewer trucks. Fewer
accidents.
And do not tell me everything will cost more! Just look at Europe!
Gas Prices
I think we should get rid of anyone in Washington, who is elected by the people of their state to represent them, and is not fighting for the US to find alternative fuels and become energy independent. I am sick of the excuse that the "environmentalists" are preventing these things from happening. Who are these people? My suspicion is that "environmentalists" is another name for Mobile, Exxon, etc. Who else would benefit by this?
I didn't elect the "environmentalists", but I do have a say in who is elected in my state. I challenge all of you to not let oil companies determine the future of our country. Let your elected officials know that you are mad as hell and not going to take it any more. Shaking these Washington elitists’ lifestyles may change the way they run the country. Get out and back people running for office who are working for us, not for the oil companies. It's better than doing nothing but complaining.
What we need is education
I have not read a single comment by anyone above who has a clue as to the real issue here with energy in the world. Folks you need to get some education. Simply putting controls on price, or blaming oil companies is absurd and will not solve a single thing. It may make us feel good, but it won't lower prices a penny in the long-run. We need to wake up and develop a serious energy policy. One that will truly make us independent of a single fuel. And forget about the idea we are going to magically wean ourselves of oil. We are always going to need crude oil. But solar is probably the best solution to oil. Wind is silly... when you need the power it is not windy. All these crazy bio-fuels simply create unintended consequences like food shortages. Let's be logical here... it is not that difficult. Mobilize a national committment to find solutions that can be achieved in 10 years. If we had spent as much money on finding an alternative to oil as we have spent in Iraq, I guarantee we would now have a serious alternative to oil. I just don't understand why this very simple idea cannot get through to Congress. And it is not big oil... stop blaming others for our moron's in Congress. Get some education... think for yourself!!! Stop listening to politicians or TV news... these people are living in the twilight zone.
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truckers
This is a depopulation plot. If food can't be transported by truckers, starving populations will accept being transported to feeding camps - translation - concentration camps for later elimination.
May 02, 2008 19:50:36 PM [permalink] [report comment]