‘If the trucks stop running, the shelves go empty’: How diesel price hikes impact consumers

UW-Madison lecturer said diesel is at an all-time high
Some trucking companies are shortening routes, others are selling off some trucks
Published: May. 13, 2022 at 3:53 PM CDT
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WAUSAU, Wis. (WSAW) - Filling up at the gas tank no doubt has burned a hole in your wallet lately. Have you considered how diesel prices also impact your budget? Diesel prices are at an all-time high which hurts trucking companies and consumers.

While trucking companies are seeing the price tag at the pump, they aren’t the only ones taking the hit.

“If the trucks stop running, the shelves go empty,” said Neal Kedzie, president of the Wisconsin Motor Carriers Association.

We rely on trucks for our necessities daily. Kedzie said 72% of everything is hauled on a truck.

“We don’t talk very much about the cost of diesel and the effect on the consumer, but there is an absolutely direct relationship,” said Moses Altsech, UW-Madison lecturer for the School of Business.

Altsech said it has a trickle-down effect.

“They use the money they make to fund the business. They have to charge more to the companies that they transport goods for,” said Altsech.

When stores you shop at pay more to stock their shelves, you pay more to buy the items on them.

“The producing company is going to go out of business, the trucking company is going to go out of business unless they pass that cost on to the consumer,” said Altsech.

There has been a 40% increase in diesel prices in the last month according to Kedzie.

Wisconsin averages $5.12 cents a gallon for diesel. The price hike combined with a worker shortage has created the perfect storm for small trucking companies.

“They’re having to increase the pay for divers and when you don’t have the money to do it, as your profit margins continue to dwindle,” said Kedzie.

Kedzie said the companies he works with have had to make tough decisions because of it.

“We have members of ours who have been selling off some of their trucks as a result of this,” said Kedzie.

They’ve also had to get creative to conserve fuel. The average 300 gal diesel (two tanks of 150 gallons) truck costs about $2,000 to fill which is 4 to 5 hundred more than last year, according to Kedzie. That’s only for one truck. Some companies have dozens. that means they are losing thousands each time the fleet fills up.

“Some truckers are actually shutting down their rigs instead of keeping them running,” said Kedzie.

Others are shortening routes. They’re doing what they can to combat the cost.

“There hasn’t been an end in sight, this is definitely cutting into the margins and really creating a real challenge, especially for our small operators,” said Kedzie.

Altsech said the market changes constantly, but the rate of change is most important. If it levels off quickly, companies often choose to take in the cost to not scare off their customers with high prices. But, if it lasts a while, they may be forced to hike prices to stay in business.

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