Learn about if there is anything we can do about the high fuel prices we are seeing.
Episode 221: Around the globe, we are seeing record breaking fuel prices. This is negatively impacting fleets and owner-operators and has even caused some smaller fleets to go under. Is there relief in sight? And if not, is there anything we can do to deal with these high prices?
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Transcript of Episode:
You’re listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. And this is the show where you get expert advice about heavy-duty parts that keeps trucks and trailers on the road longer while lowering cost-per-mile.
You know me as the host of The Heavy-Duty Parts Report, but did you also know that I am a co-host on a radio show on TNC Radio called Mind Your Trucking Business? Each week we talk on this radio show about how to help people in the trucking industry make their fleets more professional and operate more efficiently. In one of the recent radio shows that we did, there was a clip that I thought was particularly applicable to the listeners of The Heavy-Duty Parts Report. And so I wanted to share that with you, that’ll be the basis for today’s episode, I hope you enjoy it. Let’s talk about fuel prices, James, you operate a fleet, you are paying at the pump and there’s been some news that has come out, that’s going to affect surcharges. So the market is still awaiting and an update on the data that is the basis for fuel surcharges, which means that we may not see any relief at the pump anytime soon. How have things been going for you, James? How are you handling this, this huge increase in fuel expenses?
Well, the biggest thing we’ve done is handling is we’ve, we’ve got a really good fuel card program. My fleet is, we are members of NASTC, and we use their fuel program and we’ve been averaging for the size of our fleet, we’ve been averaging roughly still about a 52 cent gallon discount. But with that being said, it’s constantly rising. And what’s really getting frustrating about it is the fact that the department of energy decided about two weeks ago, that they were gonna change how they calculate the surcharge. And as far as the average, you know, the national average price of fuel, and it’s put ’em about two to three weeks behind now. And it’s really frustrating because when you got carriers that work on contracted freight, or if you’re a small carrier and you’re running dedicated freight, you can’t compensate accurately for that people’s surcharge.
You’re kind of stuck in limbo. As far as the pain that we’re seeing, you know, for across our fleet, which is the end of the month. And I was looking at some reports and stuff right before the show, is that for this month, that today’s the last day of the month. My fleet it’s costing us 85 cent, a gallon or 85 cents a bottle for fuel and that’s pretty significant. That’s, that’s pretty significant when you get out here and you’re running. I know for the truck that I operate part-time, if I go to top the tanks off, it costs me $1,200. The pump shop shuts off at $999 and 99 cents every time. And I’m still not full of fuel. So it’s, and for those that don’t have a good fuel program, it’s definitely definitely painful for them, you know, and a lot of companies are going out of business based on the rising cost fuel.
Yeah, you make a good point, James, because retail prices have remained stubbornly sticky. Sonar shows that since the recent high of $5.85 per gallon on June 22nd, the average national retail price on diesel has only come down to get this $5.82. So we’ve only seen a 3 cent drop at the retail price level. So if you don’t have a good deal and even if you have a good deal, I mean, yeah, you might be getting a discount, but a discount on what? This all time record high fuel prices. So no matter what you’re paying at the pump.
Oh yeah, absolutely. I mean, you’re gonna, you’re gonna pay it regardless. It’s just, at this point, you know, a good fuel program is nothing more than you know, kind of the ability to take a little bit of a breath, but you’re still paying it. And what’s made it even harder is that the rates are not following the fuel rates where before the rates were following the fuel, but they, they kind of sustained and they’re holding. And of course, it’s all cyclical kind of with the scenario that this industry’s in all the way from the supply chain crunch to, you know, the law, obviously 85. And then here we are talking about fuel and, and it’s just why there’s no real good answer. Because when you look at the price of fuel on the stock market, you know, for crude, it’s like that doesn’t make sense why it keeps going up when it’s doing what it does daily at the fuel end on the world market.
Yeah. And it’s, and it’s all supply and demand. I mean inventories right now, for the first time, since January are now above 30 days, which means in North America right now we have fuel reserves in excess of 30 days. And that’s the first time since January. You know, in Alberta where I live here in Canada, our province just released their budget. We were at an 18 billion deficit in the middle of the pandemic and we just reported a $4 billion surplus. All of that $18 billion deficit has been recovered by the province. We have a 4 billion surplus. This is a all at the expense of everyday people and the commercial vehicles that operate inside the trucking industry, because we’ve paid a massive price. And a lot of oil companies and even some of the states and provinces that rely on, on energy, they’re taking a windfall right now and having record profits. So the good thing is, is that the demand is coming down because the supply is going up and we need to see that continue.
Oh, absolutely. I mean it’s everything you just said is spot on, you know, and there are things that certain, you know, the administration of the country’s trying to do, which, you know, when you work the math out, it’s not gonna do anything, but save people like $7 over the course of 90 days, if they do enact the fuel tax program where they don’t charge it for 90 days, because it’s like an average of seven bucks, that’s not really gonna help. But what it is gonna do is it’s still gonna allow the oil companies and the powers to be, to continue to raise the price. There’s also talk about Governor Newsom in California, he’s talking about sending people a thousand dollars for, to assist with gas, which that’s really not gonna do nothing but increase even more inflation, you know, just print money out of thin air. And it’s gonna obviously still open the door for oil companies that continue to raise a price because there’s money that could be spent at their pumps.
The good thing in all of this is US oil production is up to 12.1 million barrels per day. That’s the highest level since the final week of April 2020, just when the pandemic was starting. So that is the good news because we are back to pre-pandemic levels, which in the long term, we would hope would bring these prices down. We need this, we need this relief. Not in a month, not in six months from now. We need it right now.
Oh, absolutely. We do. I mean, if not, there’s gonna be companies that are gonna continue to go out. I mean, I think it was in May, in the month of May alone, there were over 9,000 small carrier authorities that were reported to have either put their authorities dormant or just gone out of business. That is significant because you don’t know the number of trucks that either one of those have, but the main reason for over 80% of those was the rising cost of fuel and they just couldn’t afford it. So if this trend does continue, it’s gonna continue to hamper this industry, continue to do it.
Tom. We haven’t had a chance to hear from you. What have you been hearing from your perspective with TNC radio, you’re operating that you’re talking to a lot of people in the trucking industry.
Well, it’s the same kind of thing. I mean, it’s massively frustrating for all of them at this point. And everybody keeps saying, you know, here’s the struggle. I want to give you guys some good news here and say help is on the way here’s, here’s what’s gonna happen. But as you just pointed out, there’s nothing really serious on the table right now today. And we need the relief right now today. You know what I’m saying? And you know, we like to on this, this program, think that, you know, we’re gonna come up with, you know the positive side of the news and the, you know, here’s the good things that you can, you know, like, like we were doing last week with the cyber security, you come, come away with some things that you can actually do that will make a difference.
Tom, there is something that everyone can do. You gotta start talking to your representatives. You need to be in communication. The entire industry needs to talk to our representatives. They have to be made to understand what role trucking plays in society and how important it is, what our struggles are and what the solutions we need. It’s one proactive thing that we can do. And really, you know, just like with right to repair in the parts industry that I work in, you know, you’ve got to talk to your representatives and we need more of the federal and state representatives to be able to back the trucking industry.
Oh, absolutely. And I mean, it’s actually vitally important, not just for people in this industry, but just for every day other people, you know, to do. Please talk, I mean, the reality of it is this is that there are murmurs of a possible shutdown of a possible strike, you know? And then of course with people just, you know through attrition, just going out of business, because they can no longer afford it. The reality of it is this is that it could get to a point that three days, all it takes is three days of this industry being seriously restricted and the country is in jeopardy.
We’re gonna take a quick break. We’ll be right back. Don’t have a heavy-duty part number and need to look up a part? Go to parts.diesellaptops.com or download the app on Apple or Android to create your free account. Looking for high-quality fuel injection for heavy-duty applications? Having one supplier for fuel injection allows you to better serve customers by providing them with a complete line, which increases your sales and profitability. Learn more at ambacinternational.com/aftermarket. So our commitment to all of you listeners is that we wanna provide you with practical things that you can do to overcome some of these big issues. You know, Tom, in the long term, it seems to me that fuel prices have to come back down. They just have to, but what is your viewpoint on when we might see some relief at the pump?
Seeing that there’s no real action going on right now to relieve it. I’m an optimist. Okay. I’m a glass half full kind of guy. I don’t see any relief coming for months because we are not doing the things that we need to do to get the stuff to come down. I do like that some of the futures markets are looking a little bit better, but that again takes a while to translate to issues, you know, to those things don’t translate today to the relief we need today. While I’m a optimist, glass half full right now, the rest of the glass isn’t gonna fill up here for months. You know, this is the halfway through the year. If we see a significant relief between now and September 1st and diesel prices, I would be stunned, happily stunned, but I don’t see that happening in the next three months.
One thing I wanted to talk about with the diesel prices. I mean, if there’s nothing we can do there, then we can make our trucks more efficient. So there’s a couple things that you can do if your truck has a diesel emission system, everything 2007 and after does, one of the most important things that I can recommend is making sure that your diesel emission system, including your DPF filter is kept clean as possible. There’s a solution out there for decarbonization of both your engine and your emission system. That’s available through a company called decarb. You could check that out. You wanna make sure that when your DPF filter comes out and you have it clean that you have the entire system inspected because it might be that your SCR or your other components in the system need to have a bit of service done and perhaps even cleaned as well.
So there’s keeping that truck on the maintenance side as right up to date is very, very important. And you know, things like the cleaning doesn’t require parts replacement. So it’s not gonna tap into that supply chain issue that we’re talking about. And then the other thing that I would, I would say just on the maintenance side for fuel is there are some products for aerodynamics that are very low cost that can make a significant difference. We’re talking as much as two to 5% on your fuel economy. So you know, look into that. There’s a couple products like the Ecofin is a very cheap product that has a really great engineered backed solution to lower emission costs, or sorry, fuel costs in total. It actually disrupts the vortex around the vehicle and kicks the air out, makes the vehicle more aerodynamic and it is something that’s that you can actually install yourself.
So there’s several things like that by all means. Anytime you want some help on that side of it, you want some ideas reach out to me directly because I would be happy to provide you with introductions to some of the products and people that I know in the industry to help you get those fuel costs down. I know right now spending a little bit of money to save money seems almost counterproductive, but it might be the only way to provide you with a little bit of relief on your fuel prices. So we can talk more about that in the future, but again, by all means, reach out to me directly anytime for advice on products and introductions to people that can help you.
How can people reach out to you, Jamie?
So the best way is to go over to heavydutypartsreport.com. That’s my website for my show, but it also has all my contact info and social media links. So that way you can get ahold of me. And you could also email me at [email protected].