In US, sticker shock over fuel prices
With crude oil pricier than it's been in years, many truckers can't afford the diesel to haul goods.
PORT ELIZABETH, N.J.
Jose Correia is making one last run to Maine, then he'll park his 18-wheeler. The big-rig owner says he can't afford to keep driving - not with fuel prices draining an extra $400 from his wallet each time he fills the tank.Skip to next paragraph
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"I'm taking money that's supposed to go for my health insurance and using it to buy fuel," he says.
The pocketbook pinch that is driving truckers like Mr. Correia to quit hauling is now being felt across a broader swath of America. Crude-oil prices have hit $30 a barrel for the first time since 1991 - and homeowners are paying twice what they did last winter for heating oil, motorists face the highest gasoline prices since 1990, and airlines are tacking on fuel surcharges. In the Northeast, where prices are highest, truckers are protesting at statehouses and shipping wharves in hope of getting relief - while potatoes in Maine sit in cold storage until someone is willing to transport them to grocery stores to the south.
The inflationary effect of higher oil prices has been modest so far, but economists expect that to change this year as the increases ratchet through the economy. Mark Zandi of the Dismal Scientist, an economic Web site, expects the inflation rate in 2000 will jump one full percentage point over last year's because of higher energy prices.
"We're in store for the highest energy prices since the 1980s," predicts Mr. Zandi.
Supply and demand
Behind the rise is an improving world economy, which is pushing up demand for petroleum products even as the Oil Producing Exporting Countries (OPEC) are holding down supplies.
Oil experts believe demand is currently exceeding supply by about 4 million barrels of oil a day. Next month, OPEC oil ministers will meet to decide whether to open the spigots a bit. Zandi says it's possible they will restore at least some of their earlier cuts in production.
More oil production might help. But what's hit America's truckers hardest is how quickly the price of diesel soared. Because of cold weather in the Northeast, demand for home heating oil spiked, causing a severe shortage in the diesel-fuel market.
The sudden high prices left truckers reeling from a kind of sticker shock.
As he waits in his cab to pick up a container here at Port Elizabeth, N.J., Fils Benicoit talks of watching fuel go from 97 cents a gallon to $2.29. Last week, he says, he joined other owner-operators who refused to work for two days to protest the fact that the increased costs are coming out of their own pockets. "We're planning to do it again on Friday," he says.
The drivers have no choice, says Mohamad Awada, an organizer of the strike.
Looking at his own rig, he says he now pays $750 each time he fills his tanks - instead of the $250 he paid last summer. He will be waiting several hours on a line to pick up a container. After he delivers it, he gets $50.
"I must make $1,500 a week to break even, and that's just not happening," he says.
Discontent by the truckers may already be having an effect on the delivery of goods across the country. During a normal year, independent truckers hauling goods to Boston have then driven further north to Maine to bring back potatoes.
"Now, they are not coming up here but heading south to get back to lower fuel prices," says Mike Corey of the Maine Potato Board in Presque Isle.
Without the trucks to move the spuds, potatoes are sitting in cold storage.
Because they can't get Maine potatoes, stores are buying the tubers from other states, Mr. Corey says. "We're just going to have wait it out and hope someone comes to their senses," he says. "But I can tell you this is not good for our farmers."
Bob Jasmon, executive vice president of the Midwest Truckers Association, says he has heard of truckers turning down loads headed for the East because of the high diesel prices. With 20 percent of companies' overhead tied up in fuel costs, he says, "they are just refusing to go that way." Many trucking companies are adding fuel surcharges to their bills.
But Dennis McNichol, owner of Philadelphia-based Johnsons Transfer, says the diesel price is changing so fast - both up and down - that it's hard to keep up. Every day a price list is faxed to him. Last week, there was an 80-cent-per-gallon difference between the highest and lowest sellers.
"I think there is a lot of gouging going on," he says.
Some truckers hope that once the weather warms up, prices will come down. But Rita Bontz, head of the Independent Truckers and Drivers Association, worries that high fuel prices will have a longer-term effect on the business.
"People don't realize how important the owner-operator is - they carry most of the fresh produce and move most of the containers off ocean-going ships," she says. "Even though I think the fuel crisis will go away, I expect some very good truckers will fall by the wayside."
(c) Copyright 2000. The Christian Science Publishing Society