Trucks at Work

The diesel burn

Everyone in trucking knows that fuel prices are skyrocketing and burning a gigantic hole in a lot of wallets out there (more so for ones without fuel surcharges in place - ones that actually stick, I might add). Yet when you start looking at the numbers, that‘s when the scariness of the situation really comes into focus, I think.

According to the International Energy Agency, oil prices jumped 45.3% since January. And U.S. diesel prices are up 18% just since September - nearly double the 10% rise in gasoline prices. The situation isn‘t going to get better anytime soon, either, because a lot of new unexpected pressures are now coming to bear on diesel supplies.

For example, the Wall Street Journal noted that a spate of refinery outages in Europe is creating a wellspring of demand for diesel in that part of the world. That‘s because half of the 15 million cars and light vehicles sold in Europe every year run on diesel, compared to just 50,000 diesel cars sold in the U.S. annually.

Then there‘s diesel‘s arch enemy, home heating oil. Both are made from the same base petroleum distillate and when demand for heating oil goes up, it takes precedence over diesel fuel production. And that‘s what‘s happening now - and not only is demand for home heating oil up, so are prices, jumping 10% in the last month.

Then there‘s the problem posed by rising automotive sales in China and India, two gigantic nations that didn‘t use to have major auto demand. Annual car sales in China alone have doubled since 2004 and are estimated to hit 4.1 million units a year by 2008. By 2010, annual car sales may reach 10 million units per year in China, jumping to 20 million units by 2020 if the trend holds - making that country the single largest car market in the world.

It‘s a grim forecast, but then we knew it wouldn‘t be pretty.