Rising diesel prices cause unrest for the weary
By Aaron Ladage
staff writer
Months before Hurricane Katrina’s devastation rained down, a feeling of volatility and unease from skyrocketing fuel prices, and the lack of a mandatory fuel surcharge manifested itself in the form of rumors, shutdowns and protests in the trucking community in the United States and Canada.
Although the rumors have not developed into a nationwide shutdown, some protests numbered in the hundreds of trucks as drivers across the continent united to show their disdain for unfair treatment and prices.
On Aug. 10 in South Florida, a 639-truck convoy, which included tractor-trailers, dump trucks and box trucks, traveled 20 miles - including a section of the Florida Turnpike - to deliver a petition to the Miami City Hall.
The petition had thousands of signatures and demanded that the Florida Legislature approve a fuel surcharge and mandatory 100 percent pass-through for owner-operators, the Miami Herald reported.
“This rally centered around the high fuel charges that the drivers are forced to pay,” Mike Scott, president of Teamsters Local Union 769, told Land Line.
The Florida protest came the same day President Bush signed the Highway Bill. The House version of the bill contained a mandatory fuel surcharge provision - legislation that the Owner-Operator Independent Drivers Association has been battling in favor of for many years. But the surcharge was not included in the Senate’s version.
The final version of the Highway Bill, which was decided on by a joint conference committee of House and Senate members, did not include the surcharge provision.
By coincidence, more than 120 log truckers in the state of Washington parked their trucks the same day the Florida truckers convoyed. The log truckers were protesting against the four major timber companies in the area - Weyerhaeuser, Rayonier, Simpson Timber and Sierra Pacific - seeking a larger, more realistic percentage for a fuel surcharge.
“We got some increases, and we got more awareness out there with these timber companies that they can’t take advantage of us anymore,” said Rick Smith, president of the Twin Harbors Division of the Northwest Log Truckers’ Cooperative. “And that’s what we were after.”
Days later, strike rumors became reality for some California truckers, when a group of trucks convoyed through Santa Maria to protest the rising diesel fuel costs on Aug. 19.
While some media outlets reported the number of protesting trucks in the dozens, Sgt. Richard Flores of the Santa Maria Police Department put the number between 12 and 15 rigs. The truckers reportedly were blowing their horns as they drove through the downtown area, and the noise was loud enough to bring several judges out of the courthouse in the middle of legal proceedings.
On Sept. 7, about 50 coal truck drivers parked their rigs along Highway 80 in Hazard, KY, claiming they simply aren’t making enough to cover the skyrocketing cost of fuel.
One of the drivers, Tim Reid, an OOIDA member from Beaver Dam, KY, told WKYT-TV he pays as much as $500 a day for fuel.
Meanwhile, trucks at Forrester Joseph Trucking Co., a coal hauler in the area, were vandalized on Sept. 7. Seven trucks were vandalized, two were shot at, and the oil from three others was completely drained.
Police have not yet determined if there is a link between the vandalism and the strike.
Rising fuel costs hit Canada, too, where at least 500 truckers were parked along the Trans-Canada Highway in New Brunswick during a three-day protest over high fuel costs in early September.
The Royal Canadian Mounted Police told the Canadian Press they sent in extra manpower to deal with the situation, which slowed traffic moving in and out of northern New Brunswick. The Mounties issued $120 tickets to truckers for illegal parking to bust up the strike.
The truckers blocked commercial traffic in the area, but allowed other traffic through. Eric Bijeau, a spokesman for the protesters, told the Canadian Press that as many as 1,000 trucks are involved in the protest, though authorities disputed that number.
Senator pushes for tax on oil companies
Sen. Byron Dorgan, D-ND, has called for the Federal Trade Commission to begin a formal investigation of oil and gas prices. Not only that, but he wants oil companies to pay back some of the money they’ve made in recent years.
Dorgan called for the investigation before Hurricane Katrina drove fuel prices into the stratosphere. But he told Land Line there is an even greater need now for something to be done.
“I know that there’s not a free market with respect to the price of oil,” he said. “The price of oil is controlled by the OPEC countries, and there is rampant speculation.”
Dorgan said those factors have led to “dramatic windfall profits” for all of the major oil companies.
“In the last 18 months, the price of oil has gone up over $30 a barrel,” he said. “That means the major oil companies, not having one additional penny of additional costs, have experienced $7 billion a month in additional profits. That’s $80 billion a year that comes at the expense of consumers.”
Dorgan is proposing a windfall profit tax that would recapture some of that money and return it to the consumers.
“I believe it’s unfair, and it ought to be recaptured and rebated to consumers,” he said.
Dorgan said the only oil companies that would be exempt from the tax are those who take their windfall profits and invest them in exploring for new sources of oil or increasing refinery capacity.
Rampant fuel inflation has stranglehold on truckers
By Terry Scruton
senior writer
Though Hurricane Katrina sent diesel prices through the roof in September, the rising cost of fuel has been an accident waiting to happen since the first days of summer and professional truckers were among the first casualties.
Following a dip in May, prices began to climb again in June and never looked back.
A strong demand for gasoline and diesel pushed U.S. oil refineries to their capacity early this summer. This, coupled with a bleak forecast issued for this year’s hurricane season by the National Weather Service, saw prices rise to $2.234 per gallon the first week of June.
Crude oil prices also continued their record-setting climb in June, hitting $60 per barrel for the first time ever. The day after Katrina hit, oil prices shot up to a record $70.85 per barrel.
Heading into July, threats to oil refineries and rigs in the Gulf of Mexico from Tropical Storm Cindy, and Hurricane Dennis caused another spike in both oil and diesel prices.
The national average price of on-highway diesel hit a record high for the third week in a row in the week ending July 11. The national average rose 6.6 cents to $2.408 per gallon, according to the Energy Information Administration.
Hurricane Emily caused another spike in July, driving prices in New England above $3 per gallon, according to ProMiles.
Threats of terrorist attacks in Saudi Arabia and nuclear in Iran drove oil and diesel prices even higher in August. According to the U.S. Department of Energy, diesel prices in early August hit $2.407 per gallon, just shy of the record high set in July.
Meanwhile, refinery fires and shutdowns sent prices in California hurtling toward the $3 mark. Some stations in the state sailed by that mark without slowing down, topping out near $3.40 per gallon in mid-August.
At the same time, the national average for diesel rose to $2.567 per gallon, a staggering 74.2 cents higher than prices for the same week in 2004.
In the week before Katrina, diesel prices showed no signs of slowing down, climbing to a national average of $2.588 per gallon. LL
Claims of unfair prices spark debate in Washington
Congress held a series of hearings in early September to examine the possibility of price gouging among the oil companies.
Though the meetings were scheduled before Hurricane Katrina struck the Gulf Coast, Sen. Pete Domenici, R-NM, said Katrina further emphasized the need for action to be taken.
Domenici issued a stern warning to oil companies Sept. 6 saying the oil companies could easily find themselves before a congressional committee.
“Let me say to any oil company that is price gouging: They will see themselves in those witness chairs,” Domenici said.
And Domenici wasn’t the only one talking tough. House Energy and Commerce Committee chairman Rep. Joe Barton, R-TX, said Aug. 31 that something needed to be done.
“If there’s some way to keep prices from just going through the roof in an excessive, price-gouging frenzy,” he said. “Then I’m prepared to look at appropriate legislative and also enforcement actions if we have the proper enforcement tools.”
Some at the federal level, however, didn’t want the responsibility.
Federal Trade Commission Associate General Counsel John Seesel told the House Energy and Commerce Committee in early September the FTC does not have - nor does it want - the authority to investigate price-gouging allegations among individual retailers.
Seesel said that, while the FTC does investigate charges of collusion among oil companies and retailers, regulating the prices would be a step toward outright price controls by the government.
Nobody has that good of a crystal ball, but one government economist tells us what’s on his radar screen
By Terry Scruton
senior writer
The recent spike in fuel prices following Hurricane Katrina - combined with an already record-setting summer - has many drivers fearing just how high prices will go.
The answer, according to Jake Bournazian, an economist with the federal government’s Energy Information Administration, is not an easy one.
“Every winter diesel prices generally rise, especially during December and January, to reflect a higher level of demand and a tightening of supply conditions,” he said.
This winter, however, things are a bit different. Hurricane Katrina has tightened supplies by cutting off a good portion of oil from the Gulf of Mexico.
“Because of this disruption from Katrina, which sent both gas and diesel to record high levels, it’s going to take a while for these markets to get back to full production capability,” he said.
Bournazian said he expects refinery capacity to be down by about 5 percent at least through November. What happens after that depends on how much diesel inventories are drawn down while Gulf refineries work to get back on their feet.
“If they hold up rather well, retail diesel might take a mild rise during the winter,” he said. “But if they get eroded at a steady pace, you’re going to see retail diesel prices begin to rise right before Thanksgiving.”
The good news, Bournazian said, is that the oil industry did a good job of rebuilding stocks of low-sulfur diesel fuel throughout the summer. This could help keep prices down through the winter crunch.
“They built (stocks) well above the five-year average,” he said. “So even though there has been a stock draw, low-sulfur diesel stocks are still above last year’s inventory levels. That’s a good supply position going into (the fall).”
