High diesel prices are passed to the consumer
September 16, 2005
Even if you’re not filling up at the diesel pump, chances are you’re still feeling the pocket book pinch. When the price of fuel goes up, so does everything else.
“Fuel is the single largest expense, as far as overhead goes, for trucking,” said 47-year-old truck driver Steve Ritter. “Shipping goes up according to the price of fuel.
“Fuel is the largest expense for everybody out there. Everything is priced accordingly.”
Ritter works for Cinderlite Trucking, so he doesn’t have to pay for his 80 gallons a day, but he used to own and operate his own trucks in the 1990s. He knows what terror the gas gauge evokes.
Working 30 years in the trucking business, the highest he has ever seen diesel priced per gallon was $3.25. That was in August.
After 14 years of operating Wilson Enterprises, a Carson City trucking company, Bob Wilson is ready to sell his business and two trucks.
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He said it’s mostly because of complicated federal laws. He joked that you have to be a lawyer to understand the business. Diesel fuel costs haven’t helped. He passes them on to the consumer, who don’t seem to understand that he can’t help it.
“Ninety-nine percent of people don’t understand,” he said. “If they owned a truck for a day they would know. Until they hold the nozzle and see it chinking up they don’t know. And if they were smarter than me they’d only own it for a day.”
It takes $600 to fill up his truck, but Wilson fills it only halfway so it can haul more. Every day he has three to four hauling jobs in the area, which adds up when his truck gets four to six miles to a gallon.
Wilson calls the Commercial Fueling Network daily asking for the fuel price.
“(Wednesday) it was $2.95,” Wilson said. “It was up to $3.29 a few days ago. Diesel shouldn’t be as high as gas. It’s a byproduct of gasoline.”
In Reno the highest recorded diesel price was $3.36 on Sept. 5, according to AAA’s Daily Fuel Gauge Report. The average was $2.99 per gallon. The national average was a bit lower, at $2.82. In both Reno and Las Vegas this month, diesel prices stayed level with the price of unleaded, or surpassed it.
The high diesel prices haven’t escaped the notice of Carson City resident Ralph Buscher. Although he’s retired from the process-control industry, he still watches the fuel prices closely. Diesel is a byproduct of the refining process and is historically sold at retail cheaper than unleaded regular gas. And that’s why Buscher has been shocked to see it priced several cents higher than unleaded regular, particularly when diesel is priced 10 cents lower than unleaded regular on the wholesale commodity market.
“In the course of the last six months, somebody has had profits of 30 to 40 cents in excess of what the normal diesel should’ve been in relation to regular unleaded,” he said.
It affects Buscher’s wallet, too. He’s got a Ford F250 that he uses to pull a travel trailer. It costs him $90 to fill his 30-gallon tank.
“I was traveling, but it’s cost-prohibitive now,” Buscher said. ” When diesel is $3 a gallon you don’t go far. If you spend all your money to get there, you don’t have any money when you get there.”
The price of diesel in the West Coast has increased about 90 cents from a year ago, according to the Energy Information Agency. Now it’s starting to inch down. The agency recorded retail at $3.09 on Sept. 12 and $2.98 on Sept. 19.
“One of the big reasons why diesel nationwide is at times higher than gasoline is the demand for diesel has increased,” said Joe Sparano, president of Western States Petroleum Association, a nonprofit trade organization that represents the petroleum industry.
“That demand has put a strain on the refining system, which is running pretty much at full capacity for the last two years,” he said.
Most of Nevada’s gas and diesel come from California refineries. San Francisco has five refineries that serve Northern Nevada.
Power outages – like the ones that hit three refineries in Los Angeles two weeks ago – and any production interruptions cripple gas and diesel output. Recovering from a power outage isn’t as simple as flipping the lights back on.
“The cost of crude is incredibly high,” Sparano said. “The day after Hurricane Katrina it hit an all-time high of $70.80 a barrel on the New York Commodities Exchange.”
Bob Roll, a dispatcher with Cinderlite Trucking, is in charge of purchasing diesel for a fleet of 27 trucks based in Carson City. Since the first of July to mid-September, he’s logged a 22 percent increase in diesel prices. In June he was buying diesel for $2.25 a gallon. This week it hit $2.85.
“We have to pass along a fuel surcharge to our customers because we couldn’t absorb the pricing increases anymore,” he said.
That also increases the price of the goods, such as decorative rock and dirt fill. That’s also passed on to the consumer. In the case of the Nevada Department of Transportation’s freeway project, that’s the taxpayer.
In two months, the price of most rock increased 13 to 14 percent per cubic yard, Roll said.
Cinderlite’s most popular rock is red and black cinders, which it mines in Carson City. The cost of black cinders went up 20 percent from $12.50 a cubic yard to $15, and that’s one of the least expensive rocks.
Colleen and Doug Tucker, who operate Silver Eagle Moving, said increasing diesel costs are passed to the consumer with the fuel surcharge. Silver Eagle operates four trucks regionally and is connected to the Atlas system central dispatch for cross-country moves.
“They’re ridiculous, positively out of line. It’s really affecting the moving companies,” Colleen Tucker said about diesel prices.
Doug Tucker said the surcharge is up to 18 percent. In his experience, 10 percent is normal. The surcharge for each moving job is determined by how big the shipment is and the distance it’s being moved.
“The customer is paying more,” he said.
n Contact reporter Becky Bosshart at email@example.com or 881-1212.