By Judy Magallanes, Truth Staff
jmagallanes@etruth.com
As painful as it is to pump gasoline these days, most of us have at least a couple of options available to reduce our gasoline use and increase our vehicle's mileage, such as driving slower and less often, and biking or walking when possible.
But what if your work depends primarily on diesel fuel -- lots of it -- you have to pay for it out-of-pocket and your vehicle only gets 5 miles per gallon?
"Diesel fuel is the single biggest expense that our drivers have," said Norita Taylor, spokeswoman for the national Owner-Operator Independent Drivers Association. "It's been a major concern. Independent truckers are not necessarily able to raise their rates as the price of fuel goes up."
The price of diesel fuel in Indiana hit $4.46 Wednesday and $5 in California, a 200 percent increase from one year ago.
Randi Galves of Elkhart saw the writing on the wall in December, when fuel prices started to climb at the same time that the economy performed its usual winter slowdown and, this year, the "R" word crept into analysts' vocabularies, turning the slowdown into a contraction.
Randi and her sister, Diana, owned and operated PMSLogistics, a one-trailer and one-refrigerated truck company that folded in February after suffering numerous economic blows. Increased toll fees and insurance rates, patchwork transit regulations that vary from state to state and limits on the number of consecutive hours a driver can be on the road already were pressuring the industry before the diesel fuel spike.
As a result, Taylor said, some independent drivers are pulling money out of savings accounts to make up the difference until diesel prices come down. Some have parked their trucks and are taking other temporary jobs. Others have sold their rigs and gone to work for trucking companies, which tend to be more successful than independent truckers implementing and collecting fuel surcharges.
But the driver who works independently, leasing his services to a trucking company or just taking any available load, is playing a riskier game these days.
Bill Baker is an independent trucker from Elkhart, but is leased to a company for which he takes a haul from South Bend to South Holland, Ill., daily. He's still making ends meet, because the company he leases to charges manufacturers a fuel surcharge and Baker is getting at least some of that.
He blames environmentalists for the fuel price spike.
"We've got gobs of oil in this country and the environmentalists aren't letting us drill for it. Then the EPA regulations on the various types of gasoline -- each week it seems like they come out with a new blend," he said.
The new blends increase the workload on existing refineries, Baker believes. But no new refineries have been built in the U.S. in 30 years, slowing the process of getting available gasoline to market.
Baker and his rig are still on the road, partly because the rig is paid for. Independent truckers, who comprise about 90 percent of the trucking industry, are still trying to make payments on top of the many and significant increases in the cost of doing business. That means they are getting squeezed the most.
The primary effect of industry deregulation in 1980 and freight broker deregulation in 1986 has been to keep the average cost of shipping the same to the manufacturer. The increases in tolls, insurance, fuel taxes and fuel must be absorbed by the truckers.
To compensate for increasing fuel prices, fuel surcharges -- charged to the manufacturer and paid to the trucker -- have become standard on freight contracts. However, the intervention of freight brokers into the manufacturer/trucker relationship has complicated the situation, according to drivers.
"Since deregulation, freight brokers are killing the industry," Galves said. Sometimes, the brokers will promise to pay an independent driver the fuel surcharge amount, but nonpayment is common and even if a driver does receive a surcharge, accusations are widespread that brokers frequently do not pass along the entire amount of the surcharge.
"If they take a brokered load, they don't have any idea if (the broker) is going to pass the fuel surcharge along to them," confirmed Taylor.
And if there is an increase in the manufacturer's cost of shipping, the manufacturer passes it along to the retailer, which passes it along to the consumer.
Ironically, consumers who react to higher prices by buying less actually compound the problem. When consumers buy less, manufacturers begin to ship less, heightening competition among truckers to haul the loads still available and driving their profit margin, if any, down even further.