Fuel prices putting truckers, economy in peril, ATA economist tells Congress

WASHINGTON, D.C. (Feb. 14, 2000) — Soaring prices for diesel fuel threaten to disrupt the supply chain for industrial and consumer goods and drag down the North American economy, American Trucking Associations chief economist Bob Costello told a congressional hearing last Thursday.

“Before the recent spike,” he told the House International Relations Committee, “trucking companies had profit margins of only 2% to 4% on average. Now many small and medium-sized companies are actually losing money on every single haul.”

He warned that small and medium-sized companies will be forced to close their doors and park their trucks.

“Freight will start to pile up at the docks,” Costello said. “This situation will slow the economy much faster than any interest rate hikes from the Federal Reserve. And other modes of transportation will not be able to fill the void.”

The trucking industry has been pressing for government action to curb fuel price increases, including the release of more oil out of the U.S. Strategic Petroleum Reserve. There is doubt, however, that using SPR supplies would immediately knock down oil prices. Part of the current constraint on available inventories of oil products stems from refinery capacity.

U.S. Energy Secretary Bill Richardson has stood against SPR releases, saying those stocks should be tapped only when there is an interruption of supply.