Most driving folk in Montana are cringing at the gas pump, where the cost of an SUV fill-up these days is in the neighborhood of $90. But the worst off by far are people in the trucking industry—who are paying $1,000 or more to fill up a big-rig with diesel fuel.
According to the federal Energy Information Administration, average diesel prices are now about $4.49 per gallon, compared to $2.80 per gallon last year at this time. And the price spike is putting hundreds of trucking companies in jeopardy.
Lonnie Wallace, president of Jim Palmer Trucking, a national trucking service with headquarters in Missoula, says rising fuel costs have forced more than 900 independent trucking companies nationwide to declare bankruptcy since the beginning of this year. “It’s the worst the industry has ever seen,” Wallace says.
Wallace says he’s been forced to make up for the price hike in several areas, most notably in laying off 25 non-driving employees from the Missoula office. He says the company, which has a fleet of about 500 trucks, has also slashed $1.8 million of expenses.
Scott Peterson, of Peterson Trucking, a local big-rig outfit in Missoula that specializes in heavy-hauling jobs, says it costs at least $900 to fill up one semi-truck. “It’s killing us,” Peterson says. “We’re breaking just about zero.”
Peterson remains optimistic that his company of a dozen vehicles is strong enough to weather the crisis. But he says many small firms in Missoula and the region are staring at disaster. “There’s a lot of local guys on the edge of bankruptcy,” Peterson says.
One source of the problem is not hard to find: an 18-wheeler averages only about six miles per gallon of diesel. What isn’t as obvious, however, is that increased trucking costs result in higher prices for all the goods the rigs carry.
“Each time the price of fuel increases by 5 cents per gallon, a trucker’s annual costs increase by $1,000,” said U.S. Rep. Peter DeFazio, D-Ore., testifying—along with trucking industry representatives and others—at a May 6 House subcommittee on highways and transit. “When the average trucker feels the pinch of gas prices,” DeFazio said, “the increased cost of transporting goods to market significantly affects the price of many consumer goods.”
Wallace, meanwhile, predicts that smaller and weaker trucking companies will die out, leaving the bulk of their business to the bigger firms that are left standing. “The ones that survive will be stronger,” Wallace says.