Editorial: Fuel Prices Spiral On

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ust when we thought we had been battle-hardened to the endless upward march of fuel prices and that we couldn’t be shocked again, diesel and gasoline rose to their highest prices in history, according to the latest national surveys conducted by the U.S. Department of Energy.

Following the unprecedented 16-cent rise in the average price of diesel and 18.2-cent rise in gasoline the previous week, the diesel price rose again in DOE's Aug. 22 survey by 2.1 cents to a record $2.588, while gasoline jumped another 6.2 cents, to $2.612.

Diesel's price stood at 71.4 cents a gallon higher than it cost one year ago.

To put that into perspective, an economist at American Trucking Associations, Tavio Headley, said he now expects the U.S. trucking industry to pay about $72.6 billion for fuel this year, $10 billion more than it spent in 2004. And 2004’s total, he said, was $10 billion higher than the 2003 bill for fuel.

While up to now much of the effect of fuel increases has been muted by fuel surcharges, fleets are beginning to find it harder to raise their surcharges fast enough to keep up with their rising costs, and there is evidence that shippers are beginning to resist the additional payments.

And, really for the first time, economic analysts are beginning to talk openly about the drag the fuel prices are having on the economy, and to worry more about the effect on future growth and prosperity.

In addition, fuel analysts are predicting more price increases in the near future, based on wholesale-level increases that have already occurred.

Add to this turmoil uncertainties concerning the upcoming introduction of ultra-low-sulfur diesel fuel, new changes in federally mandated driver work rules and the recent discovery that truck makers are months behind in their plans to give customers test models of the new engines that are coming in 2007 models. Storm clouds are beginning to stack up on trucking’s horizon like tropical depressions in the Caribbean in August.

Just like those tropical depressions, virtually all of these issues could easily have been foreseen, especially the crisis over fuel prices.

As we have been saying for way too many months now, the fuel crisis is not going to go away on its own. We can only hope that over the long summer recess, Congress and the White House will develop the resolve necessary to implement a cogent fuel policy to ensure that we have enough fuel, at affordable prices, to continue to deliver the nation’s economy.

This editorial appeared in the Aug. 22 print edition of Transport Topics. Subscribe today.