According to current news reports, numerous school districts across the U.S. are cutting classroom funds to cover the soaring cost of diesel fuel for their buses.
Likewise, trucking companies are making tough decisions in order to meet increasing fuel costs while still delivering freight. But, unlike school districts, America’s trucking companies are also paying federal and state taxes on the fuel they purchase, further increasing their costs.
“The motor carrier industry is on pace to spend $80 billion for diesel fuel this year, which is an astounding $18 billion more than in 2004,” said ATA Chief Economist Bob Costello.
The Energy Department reports that the national average for diesel fuel now stands at a record high of $2.59 per gallon, up 71 cents from a year ago. There appears to be little relief in sight, either. While the year-to-date average of diesel is $2.22 per gallon, the U.S. Energy Information Administration recently predicted that this average price will rise to $2.29 this year.
The motor carrier industry is the primary mode of freight transportation for the U.S. economy, and as a result, it is a large consumer of diesel fuel. In 2004, trucks hauled 9.8 billion tons of freight or 68.2% of all freight transportation tonnage. In order to move all of those goods, the industry had to consume more than 35 billion gallons of diesel fuel and over 15 billion gallons of gasoline. Additionally, diesel fuel is often the second highest expense for a trucking company after labor and can equal up to 25% of total operating expenses.
“We are now at a critical point for the industry in terms of fuel prices,” Costello noted. “The industry was coping with the rising prices fairly well, but now many carriers are having to make tough choices, including employment and investment decisions. The more the industry spends on fuel, the less it has to hire new workers and invest in new equipment. And unfortunately, I don’t see much relief in fuel prices in the future.” In fact, the national average cost of diesel recently jumped 16 cents a gallon in a single week.