Truckers are paying more at the pump – 22 percent more to be exact, compared to just one year ago. Fuel prices are rising, and diesel alone may be well over $3.50 per gallon by 2019.
Why Fuel Prices Are Rising
A little over a year ago, energy companies were ready to lock in fuel prices to keep costs low in the United States. A few months later, we experienced a heavy hurricane season, with storms ravaging Texas and the Gulf Coast, doing heavy damage to oil fields and drilling stations. Since then, crude oil out of those regions has surged to over $70 per barrel, with forecasts showing a jump in oil to over $80 per barrel by the end of the year. Of course, the increase in fuel prices has sparked an increase in crude oil production, which will eventually cause a slight decrease in costs.
Dealing with the Problem
As things stand, truckers are doing everything they can to increase fuel efficiency in their vehicles. Low-tech solutions like covered wheels, investing in aerodynamics, and low-rolling-resistance tires help drivers get more miles per gallon. Trucks with automated manual transmissions also help to cut consumption. A bit up the chain of command, carriers are rolling the rising cost of fuel into the invoices for their customers. However, soaring fuel prices in the US have a larger impact than overhead costs for the trucking industry.
The Big Picture
Despite rising fuel prices, our domestic economy is on an upswing. People are earning more, manufacturers and businesses are producing more, and trucking is in great demand. That said, if the trucking industry has to pay more for fuel, and passes the cost onto their customers, then businesses will probably increase the cost of goods for consumers. Making trucks more aerodynamic can increase fuel efficiency from 6 mpg to 10 mpg, which is a great start. Other carriers are accelerating their plans to switch to all-electric or hybrid vehicles, as the immediate cost would pay off in the long run, because fleets wouldn’t be at the mercy of rising fuel prices. We can only wait and see if the analysts are correct, and prices continue to rise, or if something changes to lower the cost of petroleum products to a more affordable rate.
Express Freight Finance will continue to monitor fuel prices and will provide updates as major changes are reported.