Diesel Prices Hit Eight-year High

Truckers were paying more for diesel in late February than any other time during the last nine years.

According to the Energy Information Administration in Washington, D.C., the national average retail on-highway diesel price on Feb. 17 reached $1.704. That’s a 48 percent increase from Feb. 18, 2002, when the same measure was $1.156 and a 14 percent hike just since late January when it was $1.492.

Chaz Jones, an analyst with Stephens Inc. of Little Rock, said $1.704 is the highest price since 1994 when the Little Rock securities firm began tracking diesel costs. He said factors such as the Venezuela labor strike, frigid New England weather and likely war with Iraq are the culprits.

“Diesel fuel is the second largest expense for truckload carriers after labor,” Jones said. “Obviously besides the P&L impact, for the trucking stocks high diesel prices play a part in investor psyches against the group. Fourth quarter fuel costs affected earnings 2-4 cents per share, so we could see first quarter earnings really pressured.

Jones said although high diesel costs affect the entire industry, smaller carriers get the worst end of the stick.

Kelly Greenlee, an owner of RMX Global Logistics’ Springdale office, said the trend will likely put many small carriers out of business.

“If you talk to anyone, they’re dying,” Greenlee said. “The end story is the guys who don’t have the buying power that the big guys have, it’s killing them. It’s definitely cutting into their profits and overhead.”

RMX, which employs 26 people in Springdale, is based in Evergreen, Col.

Isolating on the Midwest, retail on-highway diesel prices for the week of Feb. 17 averaged $1.681, or a 49 percent increase over the $1.130 average from the same week last year.