MENU

Diesel Fuel Prices and the Trucking Industry

Jim McCormack

There have been numerous articles written regarding fuel for the trucking industry.  The pros and cons of natural gas over diesel have been reviewed.  The bottom line is that a truck cannot run without fuel of some kind and the price of that fuel is going to eat into the profits of the owner-operator or the company a trucker works for.

 

 

In the news lately is the proposal by the state of Connecticut that they want to raise the diesel tax from 46 cents to 52 cents per gallon.  When added to the current price of $4.16 that will make diesel in that state raise to $4.22.  The sad part is there is no end in sight and this could not only occur in other states but also have no end.

There have been many reasons presented regarding the high prices of gasoline and diesel compared to just a few years ago when diesel fuel was a fraction of the cost of regular gasoline.  One argument is that we have to import oil.  Yet numerous studies have shown that we have more underground oil in the U.S., including Alaska, than that in other parts of the world.

Another argument is that there are not enough refineries, pointing out that one was destroyed in the hurricane Katrina.  Yet, one will find refineries being shut down in California and at other locations.  Therefore, it appears that this argument is not valid.

 

Diesel, as well as gasoline, is produced from a barrel of crude oil.  This oil is refined into gasoline, petroleum gas, kerosene, gas oil, diesel, lubricating oil, and industrial fuel.  This leaves residuals of coke, asphalt, tar, and waxes, which are used, make other products.  This shows that diesel is not at the top of the list.

Currently TravelCenters of America has an agreement in place, with Shell Oil Products U.S., to place a network of natural gas fueling lanes along the U.S. Interstate Highways.  These are to be at a minimum of 100 locations with more to be added if there is a demand.

The difference between natural gas and oil is that it is actually a gas, while oil produced gasoline and diesel are a liquid.  As with oil, natural gas comes from the ground, and is the result of fossil remains of ancient plants and animals in the earth.  The pros for this fuel are that it burns cleaner, hotter   and does not produce the contaminents in the air that crude oil does.

For several years, the government has been working on biofuel.  This fuel is made from ground-grown products such as corn.  You may have noted an increase in the price of corn products in the market place.  That is because farmers have been selling their corn to the government for this purpose.  This experiment has so far proved to be too costly to put into full time production.

Regardless as to what product is produced to put power into a truck engine there will always be state and federal highway taxes.  Unfortunately, there seems to be no control over these being increased at will.  Years ago, when prices got out of hand the government imposed a ‘freeze’, which meant that the price could not be raised.  It would seem that trucker organizations, as well as companies,  should join together and petition to have a limit put on these taxes that affect a vital part of the trucking industry.  When new taxes, such as proposed by Connecticut are put into effect, it is a drain on the livelihood of truckers and trucking companies everywhere.