Bargain days fade as diesel gets greener
New cleaner-fuel rules raise trucking- and consumer - costs.
By JAMES THORNER, Times Staff Writer
Published November 1, 2007
Once upon a time, diesel fuel was a cheaper alternative to gasoline, an oily reject after refiners boiled off gasoline from crude oil.
But for long-haul truckers like John Hadley, it's become as precious as pure premium.
Hauling used cars on his big rig from Miami to Texas, the Georgia-based independent trucker topped off his tank at the Flying J Truck Stop in Pasco County for $3.17 per gallon.
The damage: $384 for 119 gallons of diesel.
"I've increased my rates. We can't afford to run trucks for free," Hadley said as he withdrew the nozzle from his 200-gallon tank. "Look at the profits the oil companies are making. We ain't making them."
The days may be past when you could pump diesel into your Mack truck or Mercedes and save a bundle. After years of dueling on price with unleaded regular gasoline, diesel is reaching record prices in many parts of the country, particularly Western states farther from refineries.
In the Tampa Bay area, the average price of diesel topped $3.15 a gallon, up from $2.60 last year. That's about 30 cents more than a gallon of unleaded regular, averaging about $2.86 locally.
As late as May of this year, diesel was selling at a 20-cent discount relative to gasoline.
What's going on? Diesel, like gasoline, is a slave to high crude oil prices that recently crossed $90 per barrel. But starting in June 2006, the federal government forced refiners to begin switching over to ultra-low-sulfur diesel. The reformulated diesel creates less pollution when burned, but costs more to make.
Starting with their 2007 model year, car and truck manufacturers had to start phasing in engines that burn the cleaner fuel. The new formula helps correct one of diesel's major drawbacks, the familiar black soot streaming from bus and truck tailpipes. Diesel's better fuel economy is winning friends among the environmentally conscious.
Ordinary consumers will likely feel the recent diesel run-up in the cost of goods like produce, soft drinks, clothes and electronics. It could range from a few cents to a few dollars, depending on the distances traveled.
"Everything we get in this country is moved by truck. It trickles down," said Jim Smith, president of the Florida Petroleum Marketers and Convenience Store Association in Tallahassee. "The consumer always ends up being the recipient of this little gift of joy."
Jack Shaw, a trucking company owner from Ocala, suggested diesel prices are cutting into an industry that doesn't need any more hurt: home building.
Shaw's company, Proline Transport, hauls plastic pipe used as electrical conduit. Proline charges the Gainesville-area factory more to ship the product. The factory passes the cost to the builders. It's the same story with lumber, concrete and other materials.
"The factory doesn't blame me," Shaw said as he tinkered under the hood of his truck at the Flying J. "They know how it is."
The American Automobile Association, which tracks diesel along with gasoline, expects prices on most motor fuels to fall this month.
With steady supplies and flat demand on the U.S. market, most of the recent run-up in crude oil prices was sparked by runaway speculation by oil traders, said Gregg Laskoski, spokesman for AAA Auto Club South in Tampa.
World events - an oil worker striker here, a military maneuver there - can send the traders into a tizzy.
"Once this rally ends in crude oil, the price plummets," Laskoski said.
James Thorner can be reached at thorner@sptimes.com or (813) 226-3313.