Samantha Kraulik/Anderson Transportation Service
You know the commercial that says America runs on coffee and donuts of a certain brand?
In truth, America runs on diesel. Ask a trucker, farmer, or factory owner.
And right now, everyone is suffering. That’s because the machines that power their businesses need diesel, which is driving prices skyrocketing right now. At around $5.50 a gallon, diesel prices are up 75% more than last year and recently broke the all-time high.
“I can almost count on burning $5-$700 a day…minimum,” says Eric Jammer, whose truck has 22 wheels, one of the largest on the road. He is used to transporting big things: military and construction equipment. He once towed an Apache helicopter.
Jammer is cutting back on trips too far from home in Houston, Texas. At most, he transports goods that are within a day or two of Texas. No more than that.
Diesel prices have soared faster than those of gasoline, which itself has hit record highs. They are rising so fast due to the same factors that have pushed oil prices up this year. The US ban on importing Russian oil after the Ukraine invasion has cut diesel.
The United States is also holding lower diesel inventories and has been exporting more fuel to Europe in recent months to help reduce the continent’s reliance on Russian fuel.
Some truckers may choose to stop driving if prices go higher
The soaring price of diesel has also contributed to US inflation, which hit a 40-year high this year.
After all, trucks move 70% of all freight in the US, from moving freight overland to shipping off a cargo ship or train.
Most carriers pass on increased fuel costs to their customers through fuel surcharges.
“Ultimately, you and I as consumers will see this on store shelves in the price of products,” says Bob Costello, chief economist for the American Trucking Association.
But some independent truck owners, like Jammer, can’t transfer fuel costs. He says operators like him won’t be able to continue hauling if diesel prices go higher. If that happens, it will result in fewer truckers on the road and that could increase the price of shipping even more.
A home builder is getting hit from all sides
Homebuilder Tom Stringham is at the other extreme, paying those fuel surcharges. Additional bills are coming in from his suppliers: the concrete company, the lumber company, and other parts suppliers. All of those factory owners have machines that also run on diesel, in addition to the trucks that also transport those products.
Ginny Emery/Wandering Albatross
Stringham is part owner of Treasure State Builders in Hamilton, Montana. His business also owns a fleet of trucks, two semi-trailers and a forklift, all of which run on diesel.
In less than six months, Stringham has spent the same amount on fuel as he spent all of last year.
“It’s definitely removing it from the bottom line,” he says.
Your business is hot. With so many people moving from the cities to the mountains during the pandemic, Stringham has been busy making custom homes.
But it faces long lead times on its deliveries that are lengthening the duration of its projects.
“I’ve been waiting 10 months for a bathtub and 11 months for appliances,” says Stringham. “That’s really hard when, I mean, the house has basically been sitting around for a month or two waiting for a bathtub.”
Stringham suspects that this long wait time is due in part to fuel costs. When diesel was cheaper, a trucker could make a trip and come back empty. But at today’s prices, few truckers are willing to do that.
“Truckers are not going to transport something to Montana unless they have a full load, both ways. So it’s creating massive delays.”
This farmer has kept 70,000 gallons of diesel stored in tanks
The semis also bring seed from over 150 miles away for Mark Darrington’s farm in Declo, Idaho. It grows malted barley that is used in popular beers like Coors and Budweiser.
At Big D Farms, Darrington and his sons also grow potatoes, sugar beets and wheat. He says diesel plays a central role in nearly every piece of equipment he uses: a sprayer with 100-foot booms to irrigate crops, there are tractors and cultivators and more.
But Darrington has escaped the sting of these high prices so far because he bought a large quantity of fuel in December, when it was 40% cheaper than it is now. He still has about 70,000 gallons of diesel stored in tanks on his property. But he fears for when he will have to buy.
“When that goes away, it goes away. And it has to be replaced,” says Darrington.