As diesel prices soared past $4 a gallon this year, Silver Arrow’s truck drivers were told to conserve fuel by driving slower and idling less. But just because diesel prices have dropped more than $1.30 a gallon since July doesn’t mean Silver Arrow is going back to its old ways.
As diesel prices soared past $4 a gallon this year, Silver Arrow’s truck drivers were told to conserve fuel by driving slower and idling less.
Their trucks are designed to get better fuel mileage. Their cabs have power units to operate the heating and air conditioning without requiring power from the engine.
But just because diesel prices have dropped more than $1.30 a gallon since July doesn’t mean Silver Arrow is going back to its old ways.
“We want to continue to focus on fuel savings,” President Jeff Wilmarth said. “Now that drivers see how it affects the bottom line of the company, they’re on board. ... We’re going to save enough money to pay them more a mile. We reap a reward, they reap a reward.”
Local transportation companies say they have to be vigilant because reducing their fuel expenses is the lone bright spot on their balance sheets. In an economic downturn, their customers ship smaller loads less often. So the drop in fuel prices isn’t a windfall; it’s a cushion from further cuts in profits.
Moreover, no one is under the illusion that fuel prices are going to drop forever.
Diesel still costs more than it did a year ago, and government forecasts suggest that it could flirt with $4 a gallon again as early as next spring.
The increase in fuel prices “has been a real wake-up call for people in this country,” said Gary Marzorati, president of William Charles, which owns Rock River Disposal and several other companies. Marzorati is also on the BusinessRockford.com advisory board. “If somebody is thinking they dodged a bullet, they missed the point.”
Propane and natural gas
Rock River Disposal has experimented with a propane-powered garbage truck, which pollutes less than diesel trucks, and is hoping to team with other companies to bring in a natural-gas fueling station to provide a cleaner, cheaper alternative for bigger fleets.
He said the drop in fuel prices hasn’t slowed his company’s efforts.
But if prices fall too far too fast, Jim Ritterbusch says, companies and consumers are likely to give up their efforts to conserve fuel. He’s president of Ritterbusch & Associates, a Galena-based oil-trading advisory firm.
The last time fuel prices spiked so much — in the mid- to late 1970s — people bought smaller cars, carpooled, used mass transit and considered alternative-energy sources. But when prices plummeted in the 1980s, those efforts stalled.
If that happens again, Ritterbusch said, “all we’re doing is sowing the seeds for another big price push right back up again. A lot of these consumer efforts are going to be reversed when the economy stabilizes.”
But transportation companies won’t have the luxury because they’ll still be recovering from high fuel prices, said George Billows, executive director of the Illinois Trucking Association.
In the past five years, the U.S. trucking industry has seen its $55 billion annual fuel costs increase to $160 billion, he said. Because of that, his group supports a national 65-mph limit for trucks, tax breaks to support alternative-power units for truck cabs and other efforts to systematically curb fuel use.
“There’s no way we’re going to forget about the pain $150-a-barrel oil is going to be for us,” he said.
And some companies benefit from a fuel-conscious transportation industry.
‘Let’s plan ahead’
Bergstrom manufactures NITE (No Idle Thermal Environment), a rechargeable-battery-operated power unit for heating and cooling truck cabs. Chairman/CEO David Rydell says it costs less and is more efficient than the engine-based alternative-power units on the market.
There’s been strong demand for the units as aftermarket additions, but now the company will be offering them on factory-built trucks.
Meanwhile, Peterbilt of Rockford has seen a 40 percent increase in truck sales in the past two months. Much of that is from operators wanting newer, more fuel-efficient models and using the decline in fuel prices as a window to make the move.
While 6 miles per gallon is considered good fuel-efficiency on big rigs, Peterbilt’s new aerodynamic trucks can get 8 mpg or more, General Manager Rich Yezzi said.
He’s also seen a lot of interest from customers wanting the dealership to make truck adjustments to further increase mileage.
“A penny a gallon can mean thousands of dollars to these guys,” he said. “As they see prices falling, they understand that they’re going to go up again. They’re saying, ‘Let’s plan ahead and make sure we’re ahead of the curve next time.’”
Thomas V. Bona can be reached at (815) 987-1343 or email@example.com.