Editorial: Chaos @ $1.609 per Gallon

The American trucking industry consumes about 30 billion gallons of diesel fuel and 15 billion gallons of gasoline a year.

One year ago, the average retail price for a gallon of diesel around the nation was $1.195. Last week the average price was $1.609, a rise of more than 41 cents.

If you project a similar rise in gasoline prices, and if the price spread continues at current levels, trucking could end up spending an additional $18.45 billion to fuel its vehicles over the course of this year.

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Even for an industry that generated more than $486 billion in revenue during 1998 for carrying 86.5% of the nation’s freight, that kind of fuel price jump is an unbearable burden.

Yes, we know that fuel surcharges are passing some of the costs back to shippers and, eventually, to consumers. But studies show that carriers typically recapture no more than 80% of such added costs. And that means that at the minimum, the nation’s truck lines are going to bear the brunt of almost $3.7 billion in added costs.

Already, at least 35,000 trucks have been taken off the road because of skyrocketing fuel prices, as their owners have decided that it’s more prudent to idle their vehicles than to keep running at a loss.

We need relief, and we need it now.

Once again, American Trucking Associations President Walter B. McCormick Jr. has urged President Clinton to open up the U.S. Strategic Petroleum Reserve in order to protect the nation’s economy by ensuring an adequate and reasonably priced supply of oil.

The reserve was established to protect the nation from petroleum blackmail by the oil-producing nations. What is happening now, with the producers restricting output in order to drive prices higher, is hardly less damaging than an outright embargo.

Rather, it’s the difference between starving to death quickly or slowly. The result is still the same.

We are entering a critical time, as the nation’s economy prepares for the peak holiday buying season. This month begins the “Christmas rush” for the trucking industry. And it also coincides with the start of the home-heating fuel season.

However, with petroleum stocks at or near record lows, we face the possibility of a horrific economic and political choice: warm homes or a viable economy.

Let’s show the oil producers that we’re serious about forcing prices down: Let’s open up the strategic reserve now.