Rising Fuel Costs - Get the facts on fuel pricing!
We have your diesel fuel cost savings solution!
Few industries feel the effects of a changing fuel market more directly than trucking. Diesel fuel is the lifeblood of the motor carrier industry and an uninterrupted fuel supply is essential to meet the nation’s transportation needs. Motor carriers consume about 53 billion gallons of fuel each year, including 38 billion gallons of diesel, to move more than 10 billion tons of freight and to keep America’s economy moving.
Recently, fuel has emerged as one of the most dynamic aspects of the trucking industry. For trucking, fuel has moved beyond issues of just cost. Factors such as formulation, energy efficiency, emissions reductions, performance and quality are transcending traditional concerns over diesel’s volatile price.
After years of paying some of the highest diesel fuel prices on record, interest in renewable fuels are gaining momentum. Motor carriers are beginning to embrace high-quality biodiesel in low percentage blends in efforts to extend the nation’s fuel supply. At the same time, the industry is transitioning to ultra low sulfur fuel to support the next generation of diesel engines designed to reduce emissions.
Rising fuel costs have the potential to create a ripple effect through the economy.
For many motor carriers, diesel fuel often represents the second-highest expense after labor and can account for as much as 25 percent of total operating costs. Because 80 percent of communities in the United States receive their goods exclusively by truck, higher fuel prices translate into higher costs for everything that is delivered by truck.
The trucking industry would benefit from a single national diesel fuel standard, which would help reduce the magnitude of fuel price spikes. In addition, the trucking industry supports long-term strategies that would increase the diesel fuel supply. These include increased refining capacity, the use of high-quality bio diesel in blends up to 5 percent as part of the national diesel fuel standard and environmentally sound exploration of Alaska’s Arctic National Wildlife Refuge and the Outer
Source: American
Trucking Associations (ATA)
Updated: June 3, 2008 The Energy Information Administration reported Monday (June 2, 2008) that the national average price of retail on-highway diesel fell 1.6 cents to $4.707 per gallon. The national average, which decreased for the first time in four weeks, is 68.2 percent higher than during the same week in 2007. Nationwide, the average price of a gallon of Ultra-Low Sulfur Diesel slipped 1.5 cents to $4.716. Diesel prices are most expensive on the West Coast, averaging $4.88 per gallon, and lowest in the Midwest, averaging $4.64 per gallon.
Just a one-penny increase in the price of diesel annualized over an entire year costs the trucking industry an additional $391 million a year.
At the current price, compared with five years earlier, it costs 230 percent, or $985, more to fuel up a typical tractor-trailer. Compared with 10 years earlier, it costs 347 percent, or $1,096, more to fuel up a typical tractor-trailer.
Rising fuel costs are having a huge impact on the trucking industry. For many motor carriers, fuel is now equal to labor as the highest expense; and for some carriers, fuel has likely surpassed labor as their largest expense.
Because trucks haul 70 percent of all freight tonnage, and 80 percent of communities receive their goods exclusively by truck, rising fuel costs have the potential to increase the cost of everything that Americans consume that comes by truck.
The trucking industry spent more than $112 billion on fuel in 2007, and we’re on pace to spend $154.1 billion in 2008 – a record high. That’s up from $106 billion in 2006. In 2007, the industry’s diesel expenditures were about equal to the entire New Zealand economy. Additionally, at $112.6 billion, the industry’s diesel bill was 9 percent larger than the entire Kuwaiti economy, the 6th largest oil exporter in the world.
The price we are seeing reflected at the pump is due to two main factors: surging crude oil prices and increased global demand for diesel fuel. Demand is not falling. We’re seeing increased demand both in the U.S. and internationally, particularly in China, India and Europe.
The longer oil prices stay above $100 per barrel, the less we can expect significant price reductions for diesel. There is a strong correlation between crude oil prices and diesel prices. More than 60 percent of what we pay at the pump is due to the cost of crude. The same is true for gasoline.
Commercial trucks consume 53.9 billion gallons of fuel each year. About 39 billion gallons, or 73 percent, is diesel. The remaining 27 percent is gasoline.
The U.S. Energy Information Administration recently predicted that diesel will average $3.94 per gallon this year, 37 percent higher than the 2007 average. So far in 2008, diesel prices have risen nearly 41 percent.
There are 42 gallons of oil in a barrel of crude oil. A barrel of crude oil, when refined, yields about 20 gallons of gasoline and eight gallons of diesel, as well as other petroleum products (heating oil, jet fuel, etc.).
In 2006, Canada was the top oil supplier to the U.S., accounting for 18 percent of U.S. crude oil imports.
To alleviate future significant fuel price fluctuations, ATA calls upon Congress and the Bush Administration to address this crisis situation and move immediately to take steps to increase diesel fuel supply. These include increased refining capacity and the environmentally sound exploration of Alaska’s Arctic National Wildlife Refuge and Outer Continental Shelf. The trucking industry promotes common-sense measures to expand the fuel supply while reducing emissions and improving the efficiency of truck transportation. Source: American Trucking Associations (ATA)
|
