Samantha Kraulik/Anderson Trucking Service
You know that ad that says America runs on a certain brand of coffee and donuts?
The truth is that America runs on diesel. Just ask any trucker, farmer or factory owner.
And right now they’re all hurt. That’s because the machines that power their businesses require diesel, which is currently commanding prices at peak levels. At around $5.50 a gallon, diesel prices are up a whopping 75% year over year and recently broke all records.
“I can reasonably expect to burn at least $5 to $700 a day,” says Eric Jammer, whose 22-wheel truck is one of the largest on the road. He’s used to hauling the big things – military and construction equipment. He once towed an Apache helicopter.
Jammer restricts driving too far from home in Houston, Texas. At most, he transports goods that will be out of Texas within a day or two. Nothing more than that.
Diesel prices have skyrocketed faster than gasoline prices, which are themselves at record levels. They’re rising so fast because of the same factors that drove oil prices higher this year. The US ban on imports of Russian oil after invading Ukraine has put pressure on diesel.
The US also holds lower diesel stocks and has exported more fuel to Europe in recent months to help reduce the continent’s dependence on Russian fuel.
Some truckers may choose to stop driving if prices continue to rise
Rising diesel prices have also contributed to US inflation, which hit a 40-year high this year.
After all, trucks carry 70% of all freight in the US, from transporting goods on land to goods coming off a cargo ship or a train.
Most trucking companies pass on increased fuel costs to their customers in the form of 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.
However, some independent truck operators, such as Jammer, cannot pass on fuel costs. He that operators like him can’t keep driving when diesel prices go up. If that happens, there will be even fewer truckers on the road, which could further increase shipping costs.
A home builder is hit from all sides
Home builder Tom Stringham is on the other end paying those fuel surcharges. Additional invoices are pouring in from his suppliers – from the concrete company, the lumber company and other parts suppliers. In addition to the trucks that also transport these goods, all these factory owners have machines that also run on diesel.
Ginny Emery/Wandering Albatross
Stringham is a co-owner of Treasure State Builders in Hamilton, Montana. His company also owns a fleet of pickup trucks, two tractor-trailers and a forklift, all of which run on diesel.
In less than six months, Stringham has spent the same amount on fuel as it has spent all of last year.
“It definitely takes it out of the bottom line,” he says.
His business is hot. With so many people moving from the cities to the mountains during the pandemic, Stringham has been busy building custom homes.
But he has to reckon with long waiting times for his deliveries, which are dragging down his projects.
“I’ve waited 10 months for a bathtub and 11 months for appliances,” says Stringham. “It’s really hard when the house has basically been waiting for a bathtub for a month or two.”
Stringham suspects this long wait is partly due to the cost of fuel. When diesel was cheaper, a trucker might make a trip and come back empty. But at current prices, few truckers are willing to do that.
“Truckers won’t ship anything into Montana unless they have a full load both ways. So that leads to massive delays.”
This farmer has 70,000 gallons of diesel stored in tanks
Semis also bring seed from over 150 miles for Mark Darrington’s farm in Declo, Idaho. He grows malted barley, which is used in popular beers like Coors and Budweiser.
Darrington and his sons also grow potatoes, sugar beets and wheat at Big D Farms. He says diesel is central to almost every piece of equipment he uses — a sprayer with 100-foot booms to water crops, there’s tractors and tillers, and more.
But Darrington has been spared those high prices so far because he bought much of the fuel back in December, when it was about 40% cheaper than now. He still has about 70,000 gallons of diesel stored in tanks on his property. But he fears when to buy.
“Once that’s gone, it’s gone. And it needs to be replaced,” says Darrington.