As a trucker I know firsthand that high diesel prices can put quite the strain on both trucking companies and the independently contracted trucker. Recently, the trucking news sphere has been awash with news of both climbing and subsequently dropping diesel fuel prices. With the uncertainty of this tumultuous market, many in the truck driving world are faced with questions about what the long term affect these cost fluctuations will have on the industry.
While it is important to be wary of rising and falling costs associated with diesel fuel prices, experts in the industry suggest that most of these fears have been hyper-inflated and perpetuated by various news outlets. Getting to the heart of the matter is much more positive news. While fears can arise from the escalating costs side of the coin, economic analyst say that a rise in diesel fuel prices has a direct relationship to stronger economic growth and a boon in available truck driving jobs.
As the global economy continues to expand, world oil prices have the potential to grow in tandem. Despite what financial experts had project back in 2010, diesel fuel costs have, for the most part, been on the steady decline. This decline translates to about 16 cents per year with brief fluctuations here and there.
However, this doesnt dispel the theory of peak oil. Under the peak oil theory, oil supply is projected to fall as production steadily decreases. The theory stems from the known fact that the typical oil well has a functional half-life. That is, as the well is continued to be mined for oil, production falls. Over time, the amount of harvestable oil is reduced.
While at a glance this theory does hold to be true, applying it to the global economy becomes problematic. Time and data have shown that as oil production begins to show signs of slowing down, prices inevitably rise. However, when these prices rise, pressure is put on entrepreneurs as well as larger oil companies to seek out other oil outfits and explore other possibilities from new oil wells. As a direct result of this, crude oil supplies hit an all-time high last year.
In our worlds current economic state, the correlation between oil supply and oil demand is about equal. This translates to stable prices. But, if prices were to suddenly rise, one could argue that the global economy is in a state of growth, growth that is in direct benefit to the truck driving industry.
While the news is marginally positive for the trucking industry, fuel prices for the general public are projected to stay in the four dollar range for the remainder of the year. As for the independently contracted trucker and the truck driving companies, both should have a plan in place in the event that diesel prices do increase and the demand for trucking falls or the exact opposite in that fuel prices continue to fall and the need for more truckers continues to dictate the industry.
Gus Wright is commercial truck driver of ten years. In his free time he works with Trucker Classifieds.