Trucking Service Samantha Kraulik/Anderson
You know the ad that says America runs on a certain brand of coffee and donuts?
In truth, America runs on diesel. Just ask a trucker, farmer or factory owner.
And right now they are all suffering. That’s because the machines that power their businesses need diesel, which currently sells for exorbitant prices. At around $5.50 a gallon, diesel prices are up 75% from a year ago and recently broke an all-time high.
“I can pretty much expect to set fires anywhere from $5 to $700 a day…minimum,” says Eric Jammer, whose 22-wheel truck is one of the biggest on the road. He is used to transporting heavy equipment – military and construction equipment. He once carried an Apache helicopter.
Jammer cut his driving too far from his home in Houston, Texas. At most, it carries goods that are a day or two from Texas. No more than that.
Diesel prices have soared faster than gasoline, which has itself reached record highs. They are rising so rapidly because of the same factors that have driven oil prices up this year. The US ban on importing Russian oil after the invasion of Ukraine weighed on diesel.
The United States also maintains 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 rise further
Soaring 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 United States, from hauling goods overland to those off a freighter or train.
Most trucking companies pass on increased fuel costs to their customers through fuel surcharges.
“Ultimately, you and I as consumers will see this on store shelves in product pricing,” says Bob Costello, chief economist for the American Trucking Association.
But some independent truck owners like Jammer aren’t able to pass on fuel costs. He says operators like him will not be able to continue transporting if diesel prices rise. If that happens, it will result in even fewer truckers on the road, which could drive up the price of transportation even further.
A home builder is hit from all sides
Homebuilder Tom Stringham is on the other end, paying those fuel surcharges. Additional bills are pouring in from its suppliers – from the concrete company, the lumber company and other parts suppliers. All of these factory owners have machines that also run on diesel, in addition to trucks that also transport these goods.
Ginny Emery/Wandering Albatross
Stringham is co-owner of Treasure State Builders in Hamilton, Montana. His company also has 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 all of last year.
“It definitely takes it off the bottom line,” he says.
His case is hot. With so many people leaving the cities and heading for the mountains during the pandemic, Stringham has been busy building bespoke homes.
But he faces long waiting times on his deliveries which lengthen the duration of his projects.
“I’ve been waiting 10 months for a bathtub and 11 months for appliances,” says Stringham. “It’s really hard when, I mean, the house has been sitting for a month or two waiting for a tub.”
Stringham suspects the long wait is partly down to fuel costs. When diesel was cheaper, a trucker could make a trip and come back empty. But at current prices, few truckers are willing to do that.
“Truckers aren’t going to haul anything in Montana unless they have a full load, both ways. So that creates massive delays.”
This farmer kept 70,000 gallons of diesel stored in tanks
Seedlings also bring seed from over 150 miles for Mark Darrington’s farm in Declo, Idaho. He grows malting barley which goes into making 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 almost all the equipment he uses – a sprayer with 100ft booms to water crops, there are tractors and tillers and more.
But Darrington has been spared those high prices so far, as he bought much of the fuel in December when it was about 40% cheaper than it is now. He still has about 70,000 gallons of diesel stored in tanks on his property. But he fears when he will have to buy.
“When it’s gone, it’s gone. And it needs to be replaced,” Darrington says.