US Increase in diesel prices adds to freight traffic problems and increases inflation

US diesel prices hit record highs, weighing on trucking industry operations, hampering corporate cargo transportation budgets and soaring supply chain costs. Getty Images

american firewoodoil priceThe grid reached a record high, suppressed truck industry operations, disrupted the company’s cargo transportation budget, increased supply chain costs, raised the operating costs of traditional industries, caused inflation on agricultural products and various consumer goods. pressure increased. and suppressed economic growth.

According to data from the Energy Information Administration (EIA), diesel for heavy-duty trucks has risen by more than $1.50 a gallon over the past two months, surpassing the national average of $5.62 a EnglandAnd the central state on the east coast is also over US$6, and the price of oil has always been relatively high.californiaUp to $6.46. With diesel inventories at historic lows, energy economists predict they could rise to $10 by the end of the summer.

US Truckers are generally smaller and have limited cash flow, so they will be particularly hard hit by rising diesel prices. Industry players point out that prices are rising faster than they ever were, and they are facing pressure to close their doors as customers rethink business plans and consumers rethink about higher product prices. Because less purchases.

Truckers typically respond to rising diesel prices by charging a fuel surcharge, but now with reduced freight demand and customer demand that rates return to pre-pandemic levels, it is difficult for truckers to pass through. . The cost can only be borne by itself and directly eat business profit. Large truck companies typically have long-term contracts with customers that include fuel surcharge clauses, reducing the likelihood of fluctuating diesel prices in their operations.

Rising transportation costs affect other traditional industry operations as well. The building materials industry reported that the current freight cost increased by 15-20% compared with the previous year; Some clients have reconsidered their real estate development plans due to the rising cost of building materials, and the building materials industry must find another construction site that is closer; Shipping, but not easy to arrange.

American commercial vehicles (including large trucks) consume about 36.5 billion gallons of diesel a year; In 2019 (latest data), motor vehicles consumed 111.6 billion gallons of diesel. Although the average consumer does not use diesel directly, rising freight costs will drive up prices of various products, increase inflation and affect economic growth.

The production and marketing of agricultural products also consumes a lot of diesel oil. Rising oil prices could force farmers to reduce planting area or fertilizer use, tighten food supplies, and drive up food prices further.

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