Cost of oil continues to rise

| Friday, April 01, 2005

Crude oil prices continued their ascent Friday, April 1, aided by rising prices for gasoline and heating oil, as well as an investment bank report that said strong demand and tight supplies could cause a “super spike” that could send prices above $100 a barrel.

The day’s activity was another strike against truckers struggling to keep fuel in their tanks in order to stay on the road.

Light, sweet crude for delivery in May jumped $1.15 to $56.55 a barrel in afternoon trading on the New York Mercantile Exchange – down about 60 cents a barrel from the all-time high set last month.

One day after jumping more than a nickel a gallon, heating oil increased more than a penny and unleaded gasoline rose about 3 cents.

Tom Kloza, director of Oil Price Information Service, told The Associated Press the recent surge in gasoline prices could cause drivers around the country to pay more than $2.25 a gallon at the pump this year. Meanwhile, the national average price-per-gallon for diesel fuel had reached $2.249 as of the Department of Energy’s weekly report on March 28.

According to ProMiles, the state of Washington had the highest statewide average for retail diesel prices Friday at $2.581 per gallon. Oklahoma had the cheapest diesel with a price of $2.123.

Goldman Sachs, a major trader in the energy markets, concerned the New York exchange with its report that “oil markets may have entered the early stages of what we have referred to as a ‘super spike’ period – a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower energy prices return.”

Arjun Murti, an analyst at Goldman Sachs, told The AP factors contributing to the build up in prices include geopolitical turmoil in oil-producing countries and greater energy efficiency worldwide. The report said prices could climb as high as $105 a barrel.

Oil analyst Victor Shum at Purvin & Gertz in Singapore, however, told the news agency chances are slim that crude oil would reach that level.

“It will take a confluence of many events to happen,” Shum said.

With the price at the pump hovering near record highs and with no immediate end in sight, owner-operators and others in the trucking industry are being dealt a serious blow for any chance at turning a profit.

One thing that could help owner-operators cope with the cost of diesel is the fuel surcharge provision recently approved in the U.S. House as part of its version of the highway bill. The surcharge language in the House bill at Section 4139 requires all motor carriers, brokers and freight forwarders running truckload freight to implement fuel surcharges and pass on 100 percent of those surcharges to the person who actually pays for the fuel.

The Owner-Operator Independent Drivers Association is urging truckers across the country to write, fax and call their U.S. senators and ask them to include the same fuel surcharge language in the Senate’s version of the highway bill.

Congress is in recess until Monday, April 4, but the Senate Commerce Committee is scheduled to take up its portion of the highway bill as soon as it reconvenes next week.

If truckers are not sure who their senators are, they may phone the OOIDA Membership Department and they’ll look up the information. The toll-free OOIDA number is 1-800-444-5791. Truckers can also call the U.S. Capitol switchboard at (202) 224-3121, give the operator their ZIP code and then be connected directly to their senators’ offices.

Comments