Independents worry fuel prices will keep rising

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Updated Jul 17, 2024

Semi trucks parked at Pilot gas station pumpsAverage diesel prices have climbed from $2.39 per gallon in October to $3.15 in March.Max Heine

Four concerns about 2021 stood out for owners of one to nine trucks, with carrier authority, in a recent Overdrive survey: driver availability, fuel costs, regulation and the political climate in Washington, D.C. When it comes to the dollars and cents of operational costs, fuel again stands out as the item expected to rise the most this year.

overdrive survey pie chartOf the many operating cost increases expected this year other than fuel and liability insurance, no single item was chosen by more than 4% of small-fleet respondents to an Overdrive survey in February. Two-thirds of respondents were for-hire carriers. Most of the others were private fleets.One in four respondents listed liability insurance premiums as the cost that increased the most on a percentage basis from 2019 to 2020, a trend of recent years that remains a major topic of concern across the industry. Yet 53% of the small-fleet respondents expect their biggest percentage cost increase this year to come from fuel.

“Fuel prices up 25% already and no signs of flattening out,” wrote one respondent. “That will for sure affect freight rates, and increased freight rates added to soaring materials prices will be throwing the brakes on the economy fast.”

Asked to rate company expenses that increased the most on a percentage basis from 2019 to 2020, 8% to 10% of respondents listed healthcare, driver pay, fuel or truck parts.

overdrive survey bar graphRetail diesel prices, as tracked by the U.S. Department of Energy, have staged a strong rebound, exceeding levels of months just before the pandemic took hold.In the context of recent years, a modest rise in diesel costs would not be unexpected. Diesel fuel prices tracked by the U.S. Department of Energy show a major dip from the beginning of the pandemic lockdown until fall. More recently, average per gallon prices have climbed from $2.39 in October to $3.15 in March.

Depressed fuel pricing for much of 2020 was a windfall for operators in niches that remained healthy. Average fuel costs per mile for the thousands of owner-operator clients of financial services provider ATBS dropped 25% from 2019 to 2020, from 46 cents to 34 cents, yielding a year in which overall revenue declined yet income was up significantly. Decreased traffic with a boost in average fuel mileage during the pandemic, ATBS said, is also considered to have contributed to lower operating costs.

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overdrive survey pie chartOther responses included maintenance costs, cash flow, equipment costs, labor costs and taxes. These responses are based on operators with their own authority and running less than 10 trucks. The poll was sent to a broader range of readers of Overdrive and sister publication Commercial Carrier Journal.One reason more than half of survey respondents expect big fuel price hikes this year was President Biden’s move on his first day in office to rescind approval for completion of the Keystone XL Pipeline project. “His revoking the Keystone Pipeline permit and his disdain for fossil fuels will cause the economy to shrink and fuel prices will rise,” wrote one of many respondents making that observation.

However, most sources in published analyses of whether the Keystone decision is immediately driving up fuel prices conclude there is no connection. A Forbes article, for example, notes that pipeline completion was years away and prices were rising before Biden’s action. Writing for Forbes, Robert Rapier said “the Keystone XL volumes and the timeframe of the pipeline’s completion are tiny variables compared to OPEC production decisions and an economy recovering from the Covid-19 pandemic.” 

Similar conclusions were put forth by The Poynter Institute’s Politifact research arm, among other sources.

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