At the end of last month, it was reported that crude oil prices hit record lows for the 2017. Even with continued and building conflict in the Middle East, oil producers seem committed to licking in low prices for the upcoming years. This shift has the trucking industry speculating and ramping up to take advantage of low oil prices in case the situation changes.
Get In While The Getting Is Good
Lower oil prices mean lower overhead costs for the shipping industry as a whole. With some shipping companies planning on increasing rates for non-business deliveries in the upcoming holiday season to offset costs, having oil prices his a new low means there will be even more savings.
Low Prices A Sign Of Reduced Production?
On the other end of the scale, some are worried that the low prices may be a sign the oil industry wants to remain competitive for longer, in light of new alternative energy technology. Many large commercial consumers, such as UPS, are planning to drastically reduce the use of gas in the upcoming year. UPS, specifically, has a goal of reducing the use of gas and diesel by 40 percent. They are planning to overhaul fleets with electric, hydraulic hybrid, and natural gas engines, instead. This will supplement the 8,000 plus electric vehicles already in their fleets.
The Impact On Smaller Fleets And Owner Operators
For most people in the trucking industry, lower oil prices simply mean business as usual, but with more savings. Many fleet owners and owner operators cite that the initial cash outlay to switch over to electric vehicles is too cost prohibitive. While the long-term savings are great, until the technology to run “clean” drops in price, and more people are trained on the maintenance of electric vehicles, it only makes financial sense to stick with gas and diesel.
Another Spike In Oil Prices?
While oil producers abroad have locked in low rates for the next few years, some are worried about an increase in the cost of production. Industry experts have pointed out that if the cost of producing oil in the Middle East rises, companies will just switch over to producing petroleum products from location in North America. Whatever the outlook is for the future of oil prices, right now they are at the lowest they have been all year, and that translates to lower costs for the trucking industry across the United States.