Sticker shock

Diesel prices won’t fall below $3 per gallon until November 2008, and even then the decrease will be slight, according to a U.S. Energy Information Administration specialist.

“Oil will still stay well above $80 a barrel,” said EIA’s Jonathan Cogan. “The big driver of prices now is high crude oil prices, and the price of everything made from it has gone up.”
Diesel is expected to average $3.18 per gallon in December 2007 and will continue to drop slightly through March 2008, when it will average $3.13 per gallon, Cogan said. Winter months increase demand for the distillate from which both diesel fuel and heating oil are made. When heating oil season ends, in February or March, a minor price drop for diesel will result.

In April, however, diesel will begin its climb to a predicted high in May of $3.18 per gallon, then descend in price from June through December 2008, Cogan said. Diesel is forecast to average $2.99 per gallon in November 2008, followed by a low for the year of $2.96 per gallon in December 2008, Cogan said.

“There will be some easing of crude oil prices because prices cannot be sustained at this level,” Cogan said. Contributing to a slight drop in oil prices will be a mild softening of the U.S. economy and slightly increased production by nations both inside and outside the Organization of Petroleum Exporting Countries, Cogan said.

Several factors contributed to crude oil’s dramatic price increase this year. West Texas Intermediate prices shot from an average of nearly $55 per barrel in January to more than $95 per barrel in early November.

“Previous oil shocks were driven by disruption, such as the 1973 Arab oil embargo,” Cogan said. While there is still disruption in oil-producing countries, notably Iraq, fuel demand is much stronger worldwide, especially in Asia.

Besides strong worldwide economic growth, other causes of price shock include:

  • Only moderate supply growth among non-OPEC countries.
  • OPEC production decisions and low OPEC spare production capacity.
  • The tightness of global commercial inventories.
  • Worldwide refining bottlenecks.
  • Ongoing geopolitical troubles.

As usual when oil prices spike, some advocate drawing down the Strategic Petroleum Reserve, the emergency response a president can use when the United States is confronted with an economically threatening disruption of oil supplies. Instead, in November, the U.S. Department of Energy awarded contracts to oil companies to add to the reserve 70,000 barrels daily for six months, beginning in January.

Several U.S. senators protested to U.S. Energy Secretary Samuel Bodman. For example, U.S. Sen. Hillary Clinton, D-N.Y., a presidential hopeful, urged a drawing down of the SPR and the less well-known Northeast Heating Oil Reserve “to send a signal to the market and ease concerns about low crude oil stocks that are driving prices higher.”

Crude oil has been withdrawn routinely from the reserve many times, but only twice for national energy emergencies: by the first President Bush in 1991, at the beginning of Operation Desert Storm; and by the current President Bush in 2005, after Hurricane Katrina devastated the oil industry in the Gulf of Mexico.

Until recent years, retail diesel cost less than gasoline, except for some harsh winters when the demand for heating oil was unusually high. Since September 2004, however, the price of diesel has been higher than the price of gas year-round because of increased world demand and tight global refining capacity.

In the United States, the transition to ultra-low-sulfur diesel fuel also has affected production and distribution costs – and the pump price.
– Jill Dunn


Transportation Bill Clears House, Bush Threatens Veto
A federal transportation bill that includes a ban on funding for the Bush administration’s cross-border trucking program cleared the U.S. House of Representatives on Nov. 14. The Senate is expected to pass the same bill this week.

While approved 270-147 by the House, the bill’s future is in doubt. President Bush has threatened to veto the $105.6 billion package, The vote fell eight short of the number needed for an override. Bush says the bill spends about $5.5 billion more than a version submitted by the White House.

The fiscal 2008 transportation spending bill was approved Nov. 8 by a House-Senate conference committee. The committee’s version retains language that would block funding for the U.S. Department of Transportation’s program allowing certain carriers to do long-haul trucking across the U.S.-Mexico border.

DOT spokesman Brian Turmail told CCJ on Nov. 9 that Transportation Secretary Mary Peters regretted the House-Senate conference committee’s decision to retain the funding ban, but that she wasn’t giving up on the cross-border program until a prohibition became law.

The bill also retains language that would prohibit interstate tolling in Texas. The amendment was introduced to the Senate’s version of the bill by Sen. Kay Bailey Hutchison, R-Texas, and was kept in the final version.

The bill also contains $195 million for a new Interstate 35 West bridge in Minneapolis to replace the one that collapsed into the Mississippi River on Aug. 1, killing 13 and injuring more than 100 people.

The bill also includes $1 billion to repair deficient bridges nationwide, a 25 percent increase in current funding. That still would lag behind the pace of spending envisioned by U.S. Rep. James Oberstar, D-Minn., in a separate authorization bill that would have created a $25 billion long-term bridge-repair plan to be financed with a 5-cent-a-gallon increase in the federal fuel tax. When H.R. 3999 left the Transportation and Infrastructure Committee, which Oberstar chairs, the $25 billion figure had shrunk to $2 billion, and the tax increase had disappeared.

Of the conference committee’s $1 billion bridge-repair appropriation, Oberstar said in a statement: “While much more is needed, this is an important first step toward rehabilitating our Nation’s deteriorating infrastructure.”

The cross-border program, which has been in place since Sept. 6, allows a limited number of Mexican trucking companies to operate beyond the 25-mile commercial zone in the United States. Under a reciprocity agreement with Mexico, the one-year program also allows a limited number of U.S. carriers to operate into Mexico.

Critics, including the Owner-Operator Independent Drivers Association and the Teamsters, argue that the program lacks enough safeguards to ensure that Mexican trucks meet the same safety standards as American trucks. Earlier this year, the Teamsters sought unsuccessfully to obtain an emergency injunction blocking the program before it began.

Teamsters General President Jim Hoffa said he fully expected the funding ban to win final passage. “Letting trucks from Mexico drive everywhere in America is unpopular for a good reason: It’s dangerous and illegal,” Hoffa said.

The Teamsters also are suing to block the program in the 9th Circuit Court of Appeals in San Francisco. The union submitted its arguments to the court in October, and the government has until Nov. 19 to reply. The case is expected to be heard in February.

“The Teamsters won’t quit the fight to stop the Bush administration’s reckless program,” Hoffa said. “Our members will urge their representatives to override the veto, and we will continue our lawsuit to prevent the program from starting up again.”
– From Staff Reports


Senator Advocates On-Board Recorders
U.S. Sen. Diane Feinstein, D-Calif., has asked the Federal Motor Carrier Safety Administration to reconsider electronic on-board recorders, citing recent high-profile truck accidents in her state.

Her Nov. 15 letter to John Hill, FMCSA administrator, asked whether the agency has the authority to require the devices and whether it is considering mandating them. She also asked whether Hill proposed another way to address driver fatigue.

Feinstein cited the Insurance Institute for Highway Safety, which claims that a third of drivers omit hours from log books and that the percentage of truckers asleep at the wheel at least once in the past month increased from 13 percent in 2003 to 21 percent in 2005.

European trucks already have non-electronic tachographs, and two years ago, the European Union began requiring new trucks to have electronic recorders, Feinstein said.

In January 2007, the FMCSA proposed a rule to establish performance standards for recorders and incentives to encourage their voluntary installation. The proposed rule would mandate the recorders, however, only for carriers that have serious and continued violations of the hours rule twice within a two-year period.

Although the American Trucking Associations generally supports the proposal’s approach, “the agency must make important changes to the proposed rule to make it effective and promote use of EOBRs,” the ATA stated in its submitted comments. The Owner-Operator Independent Drivers Association opposes the devices.

In her opening paragraph, Feinstein mentioned a May 4 wreck on I-5 in Orange County that killed three children and an Oct. 12 pile-up that killed three people and destroyed the tunnel beneath the Golden State and Antelope Valley freeways. “These devastating crashes in California highlight the cost of not moving forward with common sense measures that could make our highways safer,” she wrote.

Whether fatigue or hours violations were involved in either incident is unclear. The fiery Antelope Valley crash involved dozens of trucks, and its cause may never be known. As for the May 4 wreck, Jorge Miguel Romero, who was driving the truck that rear-ended a minivan, faces three misdemeanor charges of vehicular manslaughter and has had his CDL revoked. Prosecutors have mentioned speeding, tailgating and negligence as factors.

The parents of the dead children, Chris and Lori Coble, have joined the activist Truck Safety Coalition in lobbying for on-board recorders. They also have announced they are expecting triplets.
– Jill Dunn


Audit Finds Problems in National Driver Register
The Department of Transportation’s Office of the Inspector General, in its audit of the National Driver Register issued this week, reported finding security issues and deficiencies with the data stored in the system.

NDR, administered by the National Highway Traffic Safety Administration, is a central register that enables state department of motor vehicle officials to exchange information on problem drivers in each state, such as those convicted of driving under the influence of alcohol. The system is intended to help prevent problem drivers from obtaining a driver’s license to operate a vehicle, or being hired for safety-sensitive positions.

In 2006, state officials made more than 70 million inquiries for driver’s license applicants, 9 million of which were found in NDR. In all, 42 million problem drivers are recorded in NDR with personally identifiable information, such as driver’s name, Social Security number, date of birth, gender, height, weight and eye color.

The results of DOT-OIG’s audit, issued Monday, Oct. 29, found that drivers’ personally identifiable information was secured properly in NDR’s mainframe database. However, when transmitted or stored outside the mainframe computer, it was exposed to potential unauthorized access or unapproved use; for example, the sensitive information was not encrypted when transmitted on the network.

DOT-OIG also reported that problem drivers were not recorded in NDR in a timely manner, with millions not recorded until at least one year after conviction, which increases the potential that problem drivers could seek a valid license in another state. Also, information about drivers’ physical attributes – such as height and eye color – was missing from about 18 million records; there were more than 161,000 duplicate Social Security numbers; and problem driver records were removed improperly from NDR’s database.

DOT-OIG says NHTSA has concurred with its findings and recommendations.
– From Staff Reports


International: MaxxForce Won’t Require SCR for 2010
International Truck and Engine Corp. announced Oct. 31 that MaxxForce brand diesel engines will meet the U.S. federal 2010 emissions standards for all its core applications without the use of selective catalytic reduction systems.

Cummins also recently announced that it would not employ SCR to meet the 2010 regulations. Detroit Diesel, Volvo and Mack have announced plans to use SCR. Caterpillar has announced no details on its 2010 plans. Paccar, which plans to introduce heavy-duty engines for Peterbilt and Kenworth in 2009, also has not announced plans.

Instead of SCR, International intends to address 2010 emissions requirements for its core applications through an advanced fuel system, air management, combustion and controls. In addition, no incremental NOx aftertreatment beyond the current technology will be required on any core International on-highway application in 2010, the company says.

“This approach will best serve our core customers who value reduced product and service complexity as well as business planning continuity through another period of industry uncertainty,” says Jack Allen, president of International Engine Group. “Coming so soon after 2007 EPA standards, which mandated new engines and aftertreatment systems that drove up the price of commercial vehicles, 2010 promises to be a less taxing time for International customers.”

Today’s MaxxForce-powered International trucks in North America offer proven air- and fuel-management technologies, exhaust-gas recirculation systems and advanced aftertreatment systems necessary to meet the 2007 emissions standards for on-highway diesels, the company says. The company’s MaxxForce heavy-duty engines will be introduced in 2008.

SCR is an emissions aftertreatment technology that involves additional vehicle hardware, sensors, electronic calibrations and the use of urea injection, which will require a North American delivery infrastructure when 2010 vehicles are on the road. International says that while the company has found SCR to be a way to effectively meet 2010 emissions standards, it adds to the cost and complexity of use for commercial trucking.
– From Staff Reports


FYI | News Briefs
Hazmat Fingerprint Fee Reduced

Drivers who undergo a fingerprint background check in the process of securing a hazardous materials endorsement for their commercial driver’s license now are paying a lower fee. The FBI has reduced its fee for the search of its database, and as a result, the cost to the driver has been reduced from $94 to $89.25.

International Hybrid
International Truck and Engine has begun line production of hybrid commercial trucks in the form of the DuraStar Hybrid, a diesel-electric medium-duty truck that offers improved fuel efficiency and reduced emissions. The DuraStar Hybrid’s fuel savings can reach 30 to 40 percent in urban pickup-and-delivery applications and 60 percent or more in utility applications, where equipment such as overhead booms can be run solely on the truck’s battery power without idling, the company said.

SuperRigs Calendar
The Shell Rotella SuperRigs 2008 25th anniversary calendar is now available. Included in this year’s calendar is a DVD that chronicles all three days of the silver anniversary event in Joplin, Mo. Almost 120 working trucks entered the competition, vying for $25,000 in cash prizes and the honor of appearing in the calendar. The calendar also can be purchased online at rotella.com.

Largest Kenworth Dealership Opens
Kenworth Sales’ new $13 million, 122,000-square-foot Salt Lake City location is the truck maker’s largest dealership in North America. The new full-service facility includes an indoor showroom and 55 service bays, eight of them dedicated to preventive and express maintenance. Kenworth Salt Lake City includes an indoor truck wash, a fuel island and a body shop with a paint booth. A state-of-the-art driver’s lounge provides wireless Internet access, washers and dryers, vending machines and work space.

California Gets $1 Million in Emergency Funds
The immediate release of $1 million in emergency relief funds to California will help pay for urgent repairs to roads and bridges damaged by wildfires, U.S. Transportation Secretary Mary E. Peters announced Oct. 29. Peters said the $1 million quick release was intended to help California address repairs that need immediate attention, such as damaged or destroyed guardrails, signs or traffic signals, and to get essential sections of the highway system working again until the state completes a full assessment of the damage.

Caterpillar Gets J.D. Power Award
Caterpillar’s pickup and delivery heavy-duty engines have received the J.D. Power and Associates Award for top customer satisfaction. Caterpillar received the highest numerical score among pickup and delivery (daycab) heavy-duty diesel engines in J.D. Power’s 2007 Heavy-Duty Truck Engine/Transmission Study, which was based on 2,677 primary maintainers of 2-year-old Class 8 trucks weighing 33,000 pounds or more.

The Business Manual for Owner-Operators
Overdrive editors and ATBS present the industry’s best manual for prospective and committed owner-operators. You’ll find exceptional depth on many issues in the 2021 edition of Partners in Business.
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