On Capitol Hill today, Dave Berry – vp of truckload carrier Swift Transportation Company – plans to address how mandates for trucking to use “boutique” diesel blends and/or renewable fuels, such as biodiesel, has the potential to cripple the trucking industry.
“Diesel fuel is the lifeblood of the trucking industry. For many companies diesel fuel is the second-highest operating expense after labor, equaling between 10% and 20% of total operating expenses,” said Berry in his prepared remarks before the U.S. Senate Energy Committee.
For that reason, “a single national diesel fuel standard is critical to limiting the duration and magnitude of fuel price spikes, which are devastating to the economic health of the trucking industry,” he said.
“Varying state fuel requirements – which creates ‘boutique’ fuels – typically result in fuel price differentials and prevent diesel fuel from simply being transported from one jurisdiction to another in times of shortage,” Berry said in his testimony. “Boutique fuels, due to their limited markets, are produced by only a handful of refineries, which results in less competition and higher fuel prices.”
Additionally, Berry contended, “the renewable fuel mandate contained in both the Senate and House energy bills has the potential to increase the price of diesel fuel. The reason for this is that biodiesel is significantly more expensive to produce than petroleum-based diesel. In addition, because biodiesel is unlikely to move by pipeline, its distribution costs will be higher than ordinary diesel fuel.”
He added that, “a biodiesel mandate is merely a transfer of wealth from the trucking industry to the farmers that grow the raw materials. Moreover, [such a] mandate will only serve to increase the demand for these raw materials, which will in turn increase their price, making biodiesel even more expensive to produce in the future.”