At a time of historic inflation and economic contraction, another record is being broken. The price of diesel fuel is at an all-time high, and if you drive on Alabama roads, you could be impacted.
According to AAA, the national average of diesel is $5.54 per gallon in the United States. This time one year ago, the average cost was $3.11. In Alabama, the current average is $5.35.
The 78% increase in cost has crippled some industries and businesses across the nation. Facing higher costs of production and transportation eventually trickles down to the consumer. Even some Alabama cities are being hit hard.
In Jefferson County, Clay City Manager Ronnie Dixon announced Tuesday that the city is halting all paving projects.
"With diesel fuel over five dollars a gallon, asphalt is as high as it’s been in the last 15 years right now," said Dixon. "So, we are being very judicious, and we are patching right now rather than paving these entire roads... We will maintain, but we will not pave."
Dixon said after crunching the numbers, he determined the price of paving right now is almost three-quarters higher than it would have been six months ago and that is because of the diesel that paving trucks must use.
In south Alabama, the city of Abbeville just completed a large paving project on city streets this week. Mayor Jimmy Money said he was thankful to get the project done because fuel prices are already impacting the city in other ways.
"It has affected the diesel that we burn ourselves with trash pickup and that type of stuff," Money said. "It's made a difference, and it's kind of blowing our budget out of the water. But we're doing what we can to make it go. But yes, it impacts everybody."
Money said the prices of things the city has delivered are also increasing.
Experts watching diesel prices have noticed a large gap between gas prices and diesel prices. Both fuels come from crude oil, and they both increase similarly in normal circumstances. But with higher federal taxes levied on diesel due to carbon emissions produced, among other factors, diesel prices have skyrocketed much steeper than gas prices. The current federal tax on a gallon of gas is 18.4 cents, while the diesel tax is 24.4 cents. The federal tax has not been increased since 1993, but states like Alabama have continued to increase gas and diesel fuel taxes throughout the years. According to the Alabama Department of Revenue, the tax on diesel is currently at 29 cents per gallon.
With a nationwide supply chain issue, manufacturing costs are also on the rise, causing an even steeper spike in diesel prices.
Now, experts like Peter Meyer with S&P Global Commodity Insights say there could be an even bigger issue on the horizon. There are concerns the supply of diesel could dry up.
"Diesel supply is short all over the world due to sanctions against Russian oil and much higher post-pandemic demand as supply restocking takes place," Meyer told AG Web.
Refining capacity on the East Coast is also impacting the diesel supply, Meyer claimed.
"East Coast capacity has been cut in half from 1.6 million barrels per day to 800,000 barrels per day over the past 10 years as half of the refineries in the east have shuttered. Lower production capacities and higher post-pandemic demand has caused this squeeze in the eastern U.S."
Some farmers in Alabama are already bracing for that impact. Eric Blankenship, a farmer who happens to be the Abbeville Police Chief, has a 500-acre farm. He has been watching diesel prices and projections and said he is very concerned about the future for all farmers in his area.
"My farm is not a big farm... All I do is I have cows on it," said Blankenship. "But you know, that's not my primary source of income, it's my secondary But it would still be a huge impact on a lot of people."
Blankenship said he used to row-crop around 2,000 acres. He still tends some of his land and said he has already noticed that fertilizer prices have presented another challenge.
"I had some seed oats that I fertilized," Blankenship said. "The same fertilizer I bought last year for $250 a ton, I paid $640 a ton for it a month ago... The input costs aren't worth what your commodity prices are."
With no real relief in sight, the price of diesel is expected to continue to rise in the U.S.
Multi Service Fuel Card provided the following tips to save on diesel:
Turn your engine off. Excessive warm-up times can really sap the diesel fuel used, so avoid idling to help save fuel.
Use shore power when you can. This is also commonly known as truck stop electrification, and it allows drivers to plug in rather than idling and help to cool the vehicle while stopped. It’s estimated that shore power can save as much as $3,240 annually!
Avoid revving the engine. Get to your next gear slowly rather than as quickly as possible. It might be a little less fun, but it’s also a lot lighter on the wallet.
Find your engine’s sweet spot and run with it. Once you achieve your cruising speed, operating in the peak torque zone gives you the best possible horsepower and diesel fuel mileage.
Use your air conditioner as sparingly as possible. Running the air uses fuel, so if you can avoid using it, do so to save some money.
Anticipate upcoming traffic lights. Avoiding a complete stop can help to save fuel. If you can see the light is about to turn green and you can safely just slow down enough without stopping, you’ll use less fuel.
Maintain an extended following distance. The farther back you are from the vehicle ahead of you, the less likely you’ll have to make stops. And stopping less means preventing unnecessary acceleration due to braking.
Lower your average highway speed. This goes against the idea of getting there quicker, but every mile per hour over 55 lowers your fuel economy by 0.1 miles per gallon.
Don’t punch the throttle. Use smooth, steady fuel acceleration in order to avoid fuel burn spikes.
Utilize your cruise control. Maintaining a consistent speed through cruise control allows you to avoid using the throttle to climb hills.
If possible, use truck stops at the top of hills. Stopping at the top of a hill allows you to ease back onto the highway downhill, which requires less fuel. Use your Multi Service Fuel Card truckstop locator for alternatives.
Avoid accelerating needlessly while not using cruise control. When approaching the top of a hill, let the truck’s momentum carry it over in order to avoid hitting the throttle too much.
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