High diesel prices are hurting local trucking companies
Diesel prices are at an all-time high and local truck drivers
are feeling the effects.
High diesel prices are hurting local trucking companies
Diesel prices are at an all-time high and local truck drivers are feeling the effects.
John McFeely owns McFeely’s Truck-N-Equipment in Tres Pinos. He owns his own truck and six pieces of construction equipment.
“Normally, I haul construction equipment, or I haul my own to and from the job,” McFeely said.
The rising cost of diesel combined with a slow housing market has left him nearly bankrupt.
“I’m really on the razor’s edge of financial crash, and I had a very lucrative business since 1989 or 1990,” McFeely said. “It’s sad to say, but I’ve run out of options.”
During the week of April 14, the average price of on-highway diesel fuel in California was $4.23, according to a Web site from the Department of Energy.
At the same time last year, diesel averaged $3.02.
Truck drivers pass on the expense of rising costs to the customer through surcharges but McFeely hasn’t done that.
“We haven’t had a rate increase in three or four years,” McFeely said.
Due to the slow construction market, he is not in a position to ask for a rate increase.
“You’re sort of grateful to be invited onto a job,” McFeely said. “We’re not in a bargaining position. We’re desperate.”
To save money, McFeely recently dropped his health insurance and union membership
“Nobody has any work, because of the housing crisis,” McFeely said. “It’s not like I’m sitting down every day at Johnny’s. I’m out there everyday trying to get work.”
To make money, McFeely is working on classic cars for people.
Lenders are threatening to repossess his equipment because he cannot afford the loan payments. He would sell the equipment, but there is a glut on the market.
“I thought I’d never be in a situation where I couldn’t get rid of my equipment if things slowed down,” McFeely said. “Now you can’t even give equipment away.”
The economy is worse than politicians acknowledge, McFeely said.
“I think big government needs to step in and have some sort of a bailout program,” McFeely said.
Richard McAbee, a local trucker, agrees. The government should help lower the price of diesel, McAbee said.
McAbee’s family has been in the trucking business since 1946. He owns McAbee trucking in Hollister.
“I’d love to say that my son would be doing it, but I don’t think that will happen,” McAbee said. “I think we’ll be done within the next 8 years. It won’t be worth it.”
McAbee has other businesses whose profits are not dependent on the price of diesel.
“It used to be $5,000 per week for fuel,” McAbee said. “Now, it’s $30,000. If I didn’t have so many truck payments, I’d probably park every truck.”
Truckers should protest the price of diesel, McAbee said.
“Stop every truck in the country for a week,” McAbee said. “There’d be nothing in grocery stores. It would shut things down.”
Diesel prices will raise the price of many consumer goods, McAbee said.
“Everybody’s been to the grocery store,” McAbee. “There’s no more $1 gallon of milk.”
This is the hardest it has ever been, said Cynthia Orozco, owner of Midnight Express. Her family has been in the trucking industry for 20 years.
“We’ve been doing all right,” Orozco. “A couple of months back, it was horrible. We were barely making ends meet.”
Between March 10 and April 10, gas went up 8 percent, said Graham Mackie, vice president of Dassel’s Petroleum, Inc.
Dassel’s staff supply propane, gas and diesel to residential and commercial customers in California.
“Eight percent of a $4 value is $.32,” Mackie said. “That’s huge in one month.”
Diesel prices are unrealistically high, Mackie said.
“Somewhere, it’s got to come back to reality,” Mackie said. “I’m optimistic that it will, but I can’t give you an estimate on when.”
Although gas sales have fallen 3 percent, diesel sales have remained steady, Mackie said.
“Diesel is pretty consistent because most of the trucking industry has to keep on trucking,” Mackie said. “People can stay at home. Farmers still have to plow their field.”
That diesel sales might fall is a concern, Mackie said.
“I presume that there’s going to be some conservation somewhere,” Mackie said.
Most trucking companies have a 28 percent surcharge to cover the cost of fuel, Mackie said.
It is very difficult for the smaller trucking company, Mackie said.
“The smaller trucker has not got as much clout in influencing his customer as a larger company,” Mackie said.
Although Mackie is optimistic, truckers might have to wait until August to see diesel prices fall, said Michael Geeser, spokesman for the American Automobile Association of Northern California.
“The price of diesel gas is expected to mirror the upswing for unleaded gas, which means prices are expected to go much higher as we get into the summer,” Geeser said.
The average price of diesel in California on April 14 was $4.36.
“I would expect that to go up considerably as summer goes through,” Geeser said.
