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Crude awakening looms

By Dick Larsen
senior editor

Not too long ago, prognosticators pooh-poohed the rise in crude oil to $40 a barrel — it was just a symbol, they said. Prices would recover.

But that was not to be. Prices last month reached $54 a barrel, and analysts now say things like, “A perfect storm is whipping up a diesel crisis.”

But to owner-operators, there is nothing perfect about the impending disaster. Recently, mainstream America became more aware of the trucker’s plight when The Associated Press interviewed Todd Spencer, OOIDA’s executive vice president, for an article that newspapers across the country would publish.

The wire service report snowballed and newspapers across the nation began pursuing their own articles on the topic, addressing the often-ignored story of how soaring diesel prices affect small-business trucking and other sectors of the economy.

Spencer told The AP high diesel prices ruin small trucking firms.

“For every 10-cent increase in diesel fuel prices, 1,000 small trucking companies go under, and the trucking industry is principally small truckers,” he said.

OOIDA urged its members to contact their representatives in Congress to seek relief.

Meanwhile, diesel prices reached the $2 dollar mark in all regions of the country for two weeks in a row — a first.

The buzz
Analysts initially explained the $54-plus price per barrel by citing instability in the Middle East, political unrest in Nigeria and the Caribbean’s hurricanes.

But others say ominous changes lurk.

Author and international security expert Michael T. Klare argued that in the early decades of the new millennium, wars will be fought not just over ideology, but also over access to dwindling commodity supplies.

He recently spoke with The New Yorker magazine and National Public Radio.

He said he sees an increasing need for imported oil; a shift toward unstable and unfriendly suppliers in dangerous parts of the world; a greater risk of anti-American or civil violence; and increased competition for a diminishing supply pool.

Klare said the first military objective of Operation Iraqi Freedom was to secure control over the oil fields and refineries of southern Iraq.

In the meantime, others put aside the crystal ball and look toward the market for answers.

Heating oil stocks fell 1.2 million barrels to 51.2 million barrels in the week ending Oct. 1, leaving commercial tanks 6 percent lower than a year ago, Reuters reported.

Other oil consumers in Europe and Asia also hold thin heating oil supplies. Heating fuel inventories normally rise at this time of year in preparation for a surge in consumption in winter months.

But worries about skimpy supplies intensified after mid-September’s Hurricane Ivan, which drove U.S. crude production to the lowest level since 1950 and disrupted operations at refineries along the Gulf Coast.

Meanwhile, Nigeria remains a concern.

The country’s oil union, NUPENG, is threatening to disrupt production unless the government starts talks on retail fuel prices.

Nigeria’s oil unions called four strikes in 2004. Nigeria is the world’s seventh-largest oil supplier, producing more than 2 million barrels of crude daily.

dick_larsen@landlinemag.com

Aug/Sept Digital Edition