The national average price of diesel set an all-time record of
$5.62 a gallon, according to Energy Information Administration data released May 9. As of May 23, the national average price is
$5.57. The national news likes to focus on gasoline and its surge, but the price of diesel should be the bigger headline the country should be focused on at this point.
Diesel, which is the fuel that moves the economy, has quietly surpassed its recent record high as distillate inventories, which include diesel, have plummeted to their lowest level in years,” said
Patrick De Haan, head of petroleum analysis at GasBuddy.
The daily U.S. consumers have noticed spiking gasoline prices every time they drive to the pump, but energy industry analysts say the current spike in diesel prices is at an all-time high and is pushing up the cost of all kinds of goods. Nearly everything the average consumer buys is at some point transported in a vehicle powered by a diesel engine. Ships, trains, trucks and even some airplanes run on diesel fuel.
This increase is hitting consumer prices very hard, says Moody’s Analytics chief economist Mark Zandi, who notes that diesel has had a major impact on rising inflation.
The average consumer is not the only one affected. The diesel surge is also hitting trucking companies hard. Carriers who used to spend roughly $10,000 a week on fuel are now spending closer to $18,000 a week. Freight industry analysts suspect the very fragmented and volatile trucking industry will likely experience another severe recession. Some are even calling it a “bloodbath.” “When fuel surges as much as it has over the past couple of months, that’s usually when we see a lot of trucking bankruptcies follow,” said
Craig Fuller, founder and CEO of FreightWaves, an industry data tracker. That is horrible news for the 2+ million trucking companies in America, the vast majority of which are small businesses with just a handful of trucks.
“These small operators that live essentially on the cash flow of their trucking operations are not prepared and don’t have the balance sheets or the cash position to absorb these instantaneous shocks to their cash flow,”
Fuller said.
So, to sum it up, it is very hard to predict what is to come next, but from the looks of it, it seems like we are in for a bumpy ride. The people, who cherish and love this industry, will need to work closely together and weather the storm until relief shows up.