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Diesel Fuel Costs Climb 40 Percent
By Sean Thomas – The News Tribune

Prices for diesel fuel increased 40 percent in the last year, creating problems for truckers and affecting costs for almost everything consumers purchase, according to Don Shaefer, executive vice president of the Mid-West Truckers Association.

Schaefer said diesel fuel is cheaper to produce than gasoline and traditionally costs less until the trend changed over the past two years. Prices for diesel fuel dropped to just under $2 before Christmas, but prices are still hurting the trucking industry, Schaefer said.

In addition, while the diesel price often is in line with the price for regular unleaded, diesel prices remained high in December while other gas prices fell below $1.70 in much of Illinois.

“What we have seen in the last two years is a combination of problems: hurricanes affected refinery production in southern states, causing the supply of crude to go down along with other reasons for increases in crude prices, and there has been increased consumption worldwide,” Schaefer said.

Khan Mohabbat, a professor of economics at Northern Illinois University who studies fuel prices, said prices for diesel fuel have not decreased because the demand is fixed and a decrease in cost would not bring a higher increase in consumption.

He also attributed the increase in price to an increase in world population and fuel consumption.

“A country like China needs more fuel than they did before because of economic growth,” Mohabbat said.

Mohabbat said that although there is an increase in consumption of diesel fuel, he is not aware of any new refineries having been built in the last 20 years.

“Any time fuel goes up, the cost will be passed along to the consumer,” Mohabbat said. “Costs are being added to products, which causes inflation, due to increase fuel prices because so many products are delivered via truck.”

According to Gary Dahl, owner of a local trucking firm and who in November won the 38th District state senate race, his Peru company is spending approximately $680,000 more this year than last in fuel costs and will pay approximately $100,000 more in expenses due to toll increases in the coming year.

“I can’t absorb it, and it will have to be passed on to the consumer,” said Dahl.

According to La Salle trucking firm operator Barry Welbers, surcharges and increased rates do not totally cover the cost of the fuel increase.

“It’s still bad for business,” Welbers said. “It affects owner operators who drive their own trucks.”

According to Schaefer, not all price increases can be passed on and there are decreases in profits for those involved in the trucking industry.

“We have seen a lot of truckers who have decided they will attempt to sell their businesses and try to work for someone else due to the costs and the stresses,” said Schaefer.

Larry Held, a semi owner/operator from Colorado, who was traveling through Peru recently, said he is getting out of the business after 41 years.

“There is no more profit in it; you can make a living and that is it,” Held said.

Held said his customers want to pay him the same prices to transport goods that they paid him before his fuel costs doubled.

“Someone has to pay for it and it’s going to be the consumer,” Held said. “I get the black eye for asking for more money.”

Glen Brandner of Ladd works in trucking in the winter and farms the rest of the year. The fuel prices affect him as a trucker and as a farmer.

According to Brandner, combines and large tractors use 200-300 gallons of diesel a day. Brandner said everything he uses for business is transported or fuel associated so it affects his profits.

“Basically it’s more work for less profit,” Brandner said. “Expenses go higher and net income doesn’t go higher — it comes out of your pocket.”

“We can’t do without it,” Brander said. “It’s not right, it costs companies less to refine it than gasoline, but it’s costing us more.”

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