As we go to press, crude oil prices are climbing toward the $40-a-barrel mark, and retail prices for diesel in the U.S. have hit an all-time high. Combine war tensions in the Middle East, political tensions in Venezuela, and an exceptionally cold winter in the Northeast, and you have a potent recipe for yet another oil crisis.
World petroleum markets are, to put it mildly, volatile. In the first week of February, retail diesel jumped $0.12/gal. Such an environment makes it difficult to forecast and build reliable business plans. But one thing should be clear at this point — cheap fuel prices are not returning any time soon. Look beyond the day-to-day fluctuations and you'll see that diesel prices started 2002 at about $1.15/gal., while 2003 began with retail prices at $1.50 and climbed from there.
While such price increases affect the entire economy, trucking is particularly vulnerable since fuel is its largest expense after labor. Large for-hire fleets recover some of the additional cost with fuel surcharges, but those surcharges always lag behind the much more nimble fuel market and only cover a portion of the additional cost, especially in a soft economy where shippers resist any upward movement in prices.
Smaller carriers often don't even have the leverage to overcome that resistance, and private fleets, which operate two-thirds of the commercial trucks in this country, just have to absorb the higher operating costs.
You have no control over the world pressures moving fuel prices, nor the economic conditions that flow from steep increases in energy costs, but that doesn't mean you should just give up and pay the bill.
It's time for trucking to resurrect the intense interest in fuel economy that swept the industry in the late '70s and early '80s.
Let's face it, cheap fuel has allowed trucking to focus on problems like driver shortages and productivity at the expense of its all-out quest for fuel economy. You know what has to be done — fuel economy is a matter of taking many small steps that eventually add up to major cost savings.
That means educating drivers on their control over fuel consumption, paying strict attention to tire pressures and equipment condition, looking at better vehicle aerodynamics and all the other lessons fleets learned so well in the last era of high fuel costs.
The new engine-emissions regulations aren't going to help you here, but help is available from other new technology. On the vehicle, automated and automatic transmissions will remove some of the driver variability in the fuel economy equation, and lubrication technology has advanced significantly in this area. Information technology also offers new tools for saving fuel with sophisticated routing and optimization systems, closer vehicle monitoring and other aids to improve the amount of work a truck does on a gallon of diesel.
We have no way of knowing if the lower fuel costs of the last decade were just a momentary respite from an inevitable increase in energy costs, or if the latest run-up in petroleum is just an anomaly that will fade as quickly as it came.
There is one certainty, though — the value of optimizing fuel efficiency will help you survive whatever direction the market takes.
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