The Impact of Diesel Shortages 

0
42
Diesel

Record diesel prices are driving up the cost of everything and we are now experiencing new twenty-year lows in diesel stockpiles in the United States. Trucking and equipment dependent on diesel impact virtually every industry and are passing on those costs on to the consumer. 

More people travel in the summer months, driving up demand for fuel at a time when we are experiencing shortages. We may not see fuel prices drop down to their normal fall lows again without an increase in production or import quantities.

If you are planning to relocate or travel extensively this coming fall, you can expect to pay much more, if fuel continues to be available. The current shortages resulting from sanctions related decreases in imported fuel could spell a lot more trouble as we head into the colder months. There have been rumors of possibly running out of diesel fuel entirely in the coming weeks which could spell disaster for millions of Americans. Then we won’t be talking about high costs; we’ll be panicking about food shortages and the inability to heat our homes when it gets cold out.

Filling up a semi right now costs more than $1,000. This cost gets passed on to grocery store shoppers as higher food prices.  Although they negotiate lower prices due to their order volume, even discount chains like Target and Walmart are feeling the impact of rising transportation costs and are passing on those expenses on to the consumer. You may start seeing empty shelves showing up in these chains as the problem lingers.

Relocating Won’t Help You Escape It

Throughout the Covid lockdowns, vast numbers of businesses relocated to tax-friendlier states to avoid regulations, higher overhead, and profit loss resulting from health-related laws. While these costs are still substantially lower in some states than others, the overall cost of living is rising across the nation.

To compound problems, closures of refineries reduced domestic production. If fuel prices drive the costs of products and services excessively high, we could reach the point of decreased demand due to unaffordable prices.

Businesses and homeowners alike are holding off on starting products waiting for costs to decrease again. The cost of a 2’x 4’ just came down again, but it is still double the price it was a year ago. 

Given rising inflation, the destruction of the dollar and labor shortages, we have a recipe for things to get far worse before they get better. 

The rate of fuel surcharge has doubled in the past year. What is a fuel surcharge? Basically, a fuel surcharge is an additional fee added to the current contracted rate of oil when the cost of fuel exceeds a certain level. The longer the distance traveled, the greater the impact. Naturally, cross country truck drivers experience the brunt of the shortages.

In general, moving costs are up 20% from just a year ago. When planning a business relocation, you should now increase your budget by this rate. Even when attempting relocation on your own, fuel costs will be the bulk of the costs. If you have valuable assets to move, it’s probably not worth risking their integrity to shave a few thousand dollars off your moving costs.

LEAVE A REPLY

Please enter your comment!
Please enter your name here