Trucks transport 70% of freight, food and consumer goods.
BUFFALO, NY – With the Russian invasion of Ukraine continuing to drive up global oil prices, the cost of diesel fuel has skyrocketed, as has gasoline. Although most of us don’t fill up with diesel, we are still assigned to the supermarket or any delivery.
2 On Your Side looked at the overall impact of rising diesel prices.
As the trucks arrive at a local distribution warehouse for a supermarket chain, be aware that these huge diesel-powered vehicles are currently consuming very expensive fuel. Professor Patrick Penfield, an expert in supply chain studies at Syracuse University, tells us: “Diesel prices have risen almost 42% since the start of the year, which is yet another something we’ve never seen before.”
While we’re still frustrated with our regular gasoline prices, consider that the cost per gallon of diesel is about a dollar and a half or more than gasoline.
Calvin Lazier is a self-employed truck driver and owner/operator from Orlando, Florida who stopped in Cheektowaga for a hose repair for his big rig. He says prices are high here in New York State, but notes, “I have a friend who drives to California and they pay $7 a gallon there.”
Eventually, this will hit us all in the pocket to some degree.
“Usually there’s a correlation – every time fuel prices go up 10% there’s a 0.3% increase in inflation. So that’s what consumers are going to see – you’re going to continue to see prices go up,” Professor Penfield said.
Take into account that it is estimated that 70% of our consumer goods and merchandise are transported by truck.
Just as trucking companies and independent truckers operate on a pretty slim profit margin, they will eventually pass it on to retailers. This includes what we look for in the supermarket aisle, such as food and other products.
“For grocery stores, because they also operate on very thin margins, so in order to stay in business they have to pass those costs on to the consumer, which unfortunately creates inflation,” Penfield said.
And this applies to any delivery we receive.
Also consider that the farmers who grow these foods use diesel-powered tractors and other heavy agricultural machinery.
Then diesel-powered freight trains and even ocean-going ships with cargo containers now subject to environmental regulations use diesel instead of dirtier bunker oil.
And there is another diesel dilemma according to Penfield.
“In Europe, because of the Russian oil and gas embargo, they are using diesel to generate electricity and unfortunately that again has an impact on how much diesel we have,” said Penfield.
As for truckers, it turns out that many of the big trucking companies can actually add diesel fuel surcharges to help offset some of that higher diesel fuel cost. But independent owner-operators are particularly hard hit right now.
“A lot of them die because the fuel kills them. A lot of them are. The freelancers go to the company drivers because they don’t have to worry about fuel – they don’t have not have to worry about mechanics or anything else,” Lazier said.
“If you’re a small trucking company last year at this time – you’re paying about $10,000 for fuel – this year you’re paying about $18,000. When you see prices going that high – it usually means that we see a lot of bankruptcies with these small truck owners/operators,” Penfield said.
This could harm us all in the long run, as these drivers are essential for transporting food and freight to stores and eventually to our homes.