Diesel Prices Are Climbing: Truckers Warn of a Domino Effect

A dire warning was recently given by truckers. Diesel prices reached a national average of between $6.27 and $6.53 per gallon. Due to the high prices, American trucking companies especially felt the blistering pain. The trucking industry has always been a sector with razor-thin profit margins. The rise in diesel prices has only made it harder to survive.

Because of the diesel prices, trucking companies have had to eliminate routes, and some truckers warn this high cost of fuel could have dire consequences on the U.S. economy. The reason behind it being that when diesel prices rise, trucking companies have to raise the price of their transport services to stay profitable.

Doing this will raise grocery store prices and the cost of goods across the U.S. It will have a growing effect where one domino falls and then the next follows.

Diesel Prices Soaring

Trump predicted oil prices may start to fall after his recent fuel deal with Russian President Vladimir Putin. Trump says he believes the conflict in Ukraine could be nearing its conclusion. Still, the damage has already been done and some experts like the International Energy Agency (IEA) warn not to expect things to go back to normal for a long time. Another possible reason for the rise in oil prices has to do with the US-Iran War.

Chain Reaction Coming

Small owner-operators, due to the diesel prices, face rising pressure because of the prices with some parking their trucks and others considering it. The small owner-operators will be the first to buckle from this crushing oil pressure.

After the small companies buckle, it will add more pressure to the larger carriers. Company drivers have begun to report trucking companies scaling back their operations and cutting unprofitable routes. Over time, the pressure has become increasingly noticeable.

President Trump previously attempted to use red-dyed fuel, typically used only by farmers, to allow truckers to use it. Red-dyed fuel bypasses a tax given to most commercial vehicles. However, most analysts believe that this won’t prove a game-changer, nor will it have long-term positives. In fact, to provide relief for farmers, President Trump signed an $8 billion plan to give relief to farmers with plans to send them one-time payments.

This is not the first time President Trump has done this. Last month, he pledged that he would send all Americans $5,000 if Republicans were able to keep control over both the Senate and House. He repeated this same promise in Park City, Kansas, recently.

How the Supply Chain is Impacted by Price

Trucking suffers from outrageous diesel prices, but the lack of drivers has further impacted the cost to trucking companies, especially with the recent crackdown on foreign drivers. During this time, pricing may cease to be a reflection of the value being given. Every link in the supply chain will be altered.

When raw materials, labor, and logistics rise in price, it will have a ripple effect that eventually reaches the consumer. It will hurt businesses as well because, as prices rise, demand will drop for different services. Everyone has to raise their prices when this happens and no one wins.

What are Your Thoughts on the Cost of Diesel?

Do you think President Trump is doing a good job (considering the circumstances) keeping the cost of diesel down? Or do you think he’s the reason for the rising cost of diesel? At Trucker Social, we understand there are different perspectives on this, and we’re more interested in having a discussion about what YOU think!

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