Skyrocketing diesel a ‘crippling’ cost

By Donna Hales
Phoenix Staff Writer

March 26, 2008 11:32 pm

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Diesel prices are crippling trucking companies, says the terminal manager for Fanelli Brothers Trucking and Leasing in Muskogee.
“Diesel jumped 40 cents a gallon in the last two or three weeks,” said Ned Russell, terminal manager for Fanelli. “It’s largely increased the expense of any trucking company. It’s crippling them more and more.”
Fanelli Brothers is paying $30,000 for a tanker of fuel that used to cost $7,500, Russell said.
Some of the larger trucking companies in the nation issued statements this week they’ll be getting away from the long-haul market and going to regional markets, he said.
“I didn’t think I would ever see it,” Russell said.
The average price of diesel fuel used to be lower than the average price of gasoline, according to information on the federal Energy Information Administration’s Web site.
The EIA says since September 2004, the price of diesel generally has been higher than regular gasoline for several reasons, including:
• Cost and supply of crude oil.
• Tight refining capacity and international diesel fuel demand, which has been increasing steadily, putting pressure on the tight global refining capacity.
• Product supply/demand imbalances.
• Seasonality in the demand for diesel fuel and distillates.
In the United States, the transition to low-sulfur diesel fuel has affected diesel fuel production and distribution costs, EIA said. Also, the federal excise tax on diesel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline, according to the EIA.
It’s not just the big truck lines that are affected by the increase in diesel costs.
County commissioners haven’t seen the price escalate so much in years, said District One County Commissioner Gene Wallace.
“It’s fluctuating 10 or 20 cents a gallon daily. In 1999, we were paying 74 cents a gallon (minus tax), and in 2008 we’re paying at least $3.04 (minus tax).”
That figures out to the price being more than four times what it was nine years ago. That means there is not as much money available to spend on county road repairs, Wallace said.
The high cost of diesel is a double negative for county commissioners across the state, Wallace said.
All road maintenance money is derived from fuel taxes across the state, Wallace said. With fuel costs escalating, consumer use is going down, which means the county receives less fuel tax, Wallace said.
Wallace said he talked last week with the owner of a trucking company that delivers fuel.
“He was almost suicidal over his operational costs,” Wallace said.
Individuals also are dealing with the higher cost of diesel fuel.
Gary Davis of Tahlequah said he’s driven a diesel pickup truck for at least 20 years.
“It’s about as bad as it can get,” he said.
Davis used to pay $55 or $60 for a tank of diesel and is now paying $100, he said.
But people who drive diesels drive them for the power they have and won’t abandon diesel trucks, he said. They may wait awhile longer to buy a new one, he said.
Davis leases the Tahlequah Livestock Auction and delivers cattle in a single-axle semi that holds 300 gallons of diesel. It costs him more than $900 to fill it, when it used to cost $300, he said.
That means his earnings are taking a hit, he said.
And when the cost of hauling everything from cattle to groceries zooms up, that means consumers all take a hit in the pocket book, according to Russell.
Ken Silver of near Warner, a retired insurance agent who goes to a lot of rodeos, owns three diesel pickup trucks. He doesn’t like the cost of diesel fuel but likes the performance of diesel trucks.
“You just buy it (diesel) and go on — it’s about all you can do,” he said. “One of my three diesels has 137,000 miles on it, and it’s just broke in.”
He said he’s always had a diesel for rodeos and gets more miles out of them. He said they are more economical because the trade-in or resale value is better on diesels.
He went to a roping in Memphis last week. He said you eat up what you win before you get home with it. The same trip to Memphis that cost him $150 last year cost him $300 this year, he said. He may cut back on something else, but he won’t be slacking off from going to rodeos, Silver said.

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