This Editorial appears in the June 6 print edition of Transport Topics. Click here to subscribe today.
While we’re thankful fuel prices have moderated a bit of late, this year’s oil cost spiral apparently has taken a notable toll on the overall economy, raising concerns that the national recovery is being sapped.
The stock market sagged sharply last week amid concern that growth is slowing as consumers and businesses cut back spending on other things in order to cover their fuel bills.
Recent reports show that consumers cut their purchases on lots of things — especially on new cars and light trucks — as their concern about $4-a-gallon fuel rose.
And while the national average price of a gallon of retail diesel has now fallen for four straight weeks, and gasoline has declined for three, we are still paying just under 97 cents a gallon more for diesel and $1.06 a gallon more for gas than we were paying one year ago.
Retail petroleum prices have declined as wholesale prices have fallen off their recent high of $113.93 a barrel, set on April 29. At the end of last week, crude oil in New York was selling for around $100 a barrel, a bargain only in comparison with the late April plateau.
While crude prices are surely not the only fly in the ointment, they undoubtedly are weighing on the minds of consumers, who represent the most important element of any economic recovery.
Some analysts see the softening as a temporary — and not entirely unexpected — development and predict that growth will rebound as the year progresses.
Certainly, the continuing growth in truck tonnage — 17 months of consecutive year-over-year gains in American Trucking Associations’ key index — bodes well for future growth. While April’s gains were lower than the average for the year thus far (4.8% versus 6.5%), they were still healthy.
ATA’s chief economist, Bob Costello, recently predicted that economic growth would continue and that falling fuel prices “will help freight volumes and motor carrier bottom lines going forward.”
As a result, new heavy-duty truck sales and trailer sales are continuing to remain strong, far outstripping the levels of the past few years.
Several other analysts said that they were encouraged by the continuing strength of freight volumes, and that business patterns were returning to normal after several notably weak years.
Let’s hope that the recent declines in fuel prices continue, to the benefit of trucking in particular, and the nation’s economy overall.
