The jump in fuel prices over the past month since the Trump administration began bombing Iran has been a hit on the economy, with grocery stores, trucking companies and independent truckers feeling the effects with no end in sight.
“It keeps you awake at night,” Linda Stivason, a co-owner of M&A Transport of South Bend Township, Armstrong County, said of the increasing diesel fuel prices.
“It’s taking our cash flow … ’cause it’s using a lot of money” that cuts into the profit margin of a company with a fleet of about 45 trucks, Stivason said.
“Nobody can do anything about it,” she added.
Peace talks with Iran are reportedly underway. But, even if peace is achieved soon, there will be lingering effects, said Erica Owen, an assistant professor at the University of Pittsburgh’s Graduate School of Public and International Affairs. That’s because it will take time before the shipping lanes open and shippers are confident that it’s safe to move their tankers, she said.
“It’s not going to bounce back right away,” she said. “Its effect will persist and diffuse throughout the economy.”
It’s not only oil shipments that are being held up. Fertilizer for farming, aluminum and other imports through the Strait of Hormuz have been delayed for weeks, said Owen, whose research focuses on the politics and economics of trade and global production.
“It makes everything we want more expensive,” Owen said. There will be long-term impacts on the Middle East, responsible for so much of the world’s oil production.
The effect on diesel fuel
Average diesel fuel prices for Pennsylvania and surrounding states has risen from $4.10 a gallon in late February to $5.62 a gallon since the war began, according to the U.S. Energy Information Administration. That compares with an average of $3.87 per gallon a year ago, according to EIA data.
In stations along Interstate 70 in Westmoreland County, diesel fuel was averaging around $5.99 a gallon Wednesday. That price was about the same throughout the Allegheny Valley, according to online price tracker GasBuddy.
For Tarentum-based Weleski Transfer, the spike in diesel means a difference of thousands of dollars, according to director of operations Greg Selinger.
The moving and storage company’s drivers do small local moves as well as cross-country hauls. The upsurge in prices is only the latest blow to the moving industry, which already was suffering from low rates of home buying, Selinger said.
“It gets harder and harder,” he said. “The margins are getting slimmer and slimmer.”
But in an industry that relies on diesel, Selinger said, the company isn’t left with many options.
If prices remain high — or skyrocket further — he said the company may be forced to raise its rates or fuel surcharge to stay in the black.
That means expenses would ripple out to the rest of the market, Selinger said.
“It affects everybody,” he said. “It’s not a good thing right now.”
It’s a conversation Diane Markle, a clerk at the Smithton Truck & Auto Plaza just off the Smithton exit of Interstate 70, said she’s had with other truckers recently.
“They’ve all been talking about the price and the rise in the fuel surcharge on their end and how it trickles down to the consumer,” Markle said.
Tacking on a fuel surcharge is not always an easy solution for a trucking firm looking to cover extra fuel costs. Reon Snyder, owner of Reon Snyder Trucking of East Huntingdon, who has been in the trucking business for about 60 years, said getting the fuel surcharge from a shipper can be easier said than done.
“A lot of them don’t want to pay it. Some of the rates they want (to pay), it doesn’t pay (the trucking firm) to haul it,” Snyder said at the firm’s office just outside of Scottdale. His fleet of eight trucks hauls scrap and other material to customers in Pennsylvania and other states.
Adding to the woes of the independent truck driver is that some shippers who collect the fuel surcharge from customers don’t pass it along to the truckers that are paying for the fuel. That’s according to Jami Jones, editor of the trucking publication “Landline” for the 150,000-member Owner-Operator Independent Drivers Association based near Kansas City, Mo.
That’s hurting the independent truckers’ already-tight profit margins, Jones said.
Josh Orris, general manager at W.L. Roenigk Inc. in Buffalo Township, said the school bus company hasn’t yet been hit by the spike, however.
The company, which provides busing services for more than a dozen school districts in the region, buys fuel in bulk and stores it in an underground tank, he said.
Orris said he’s unsure what the future holds, but if fuel prices climb high enough, rates would increase for the school districts.
Grocer: ‘You just eat it’
The fuel surcharge cuts into the profit margins for a supermarket owner like Bill Naser, whose Naser Foods has stores in Oklahoma Borough and Pleasant Unity.
Naser said he just paid a fuel surcharge of $600 this week for a trailerload of groceries, an expense that was just $230 the week of March 6.
Naser said he’s not reacting to the jump in fuel surcharge fees on deliveries by raising his prices.
“You just eat it. That’s all you can do,” said Naser, who has been in the grocery business for 48 years. “You can’t go up and down (in prices) every week.”