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The Squeeze of Diesel Farmers, Truckers Not Getting Relief at Pump American Trucking Associations Predicts That Motor Carriers Will Spend a Record $85 Billion on Fuel This Year.Nebraska Average Fuel Prices

Posted on: Saturday, 29 October 2005, 18:00 CDT

By Michael O'Connor

There were times in the past when motorists probably wished they could pump diesel into their cars.

Not any more.

Diesel has traditionally cost less than regular unleaded gasoline, but that hasn't been the case this fall.

Prices for diesel and regular gasoline shot up in early September after Hurricane Katrina knocked out Gulf Coast refineries.

Prices for gas began dropping as demand fell with the end of the summer travel season.

But diesel prices generally didn't go down. In fact, prices rose because demand remained strong, partly due to the harvest season, said Rose White, spokeswoman for AAA Nebraska.

Farmers burned through the fuel as they worked their fields in diesel-powered combines and tractors.

"They are really feeling it," said Craig Head, an official with the Nebraska Farm Bureau Federation.

White said prices also are up because diesel and home heating oil are both derived from the same type of heavy crude oil. As temperatures have dropped, the need has grown for that type of crude.

Diesel use also rises in the fall as the trucking industry delivers more toys, electronics and other merchandise to retailers for Christmas, White said.

The trucking industry is feeling the squeeze.

"It's a huge hit,'' said Nance Harris, spokeswoman for the Nebraska Trucking Association.

Consumers also will feel the pinch as the higher costs truckers and farmers are paying for fuel are passed along in the price of food and retail merchandise.

Nebraska's average price for diesel on Friday was $3.32 per gallon, up $1.12 from a year ago. Iowa's average price was $3.26, up $1.07 from a year ago.

The trucking association says small trucking companies and independent drivers are especially vulnerable when fuel costs take big jumps.

The American Trucking Associations projected in September that motor carriers will spend a record $85 billion on fuel this year, an increase of $23 billion over 2004.

Ernie Goss, an economics professor at Creighton University, said demand for diesel doesn't fully explain the wide gap between prices for diesel and regular gasoline.

On Friday, the average price for diesel in Nebraska was 97 cents higher than the $2.35 average price for regular unleaded.

A possible explanation for the gap is that the oil industry might be feeling more political and public pressure to keep regular gas prices lower, he said.

Goss is a member of the task force appointed by Nebraska Attorney General Jon Bruning to investigate all aspects of the oil industry to determine whether price gouging is occurring in the state.

Goss said the investigation is focusing on regular gas, but still might produce some insights into the high price of diesel fuel this fall. The task force is expected to complete its investigation by the end of the year.

He said consumers can expect to pay slightly more for food and retail merchandise because of the high diesel prices.

Nebraska average fuel prices

Sept. 1 Regular unleaded: $2.76 Diesel: $2.65

Sept. 6 Regular unleaded: $3.20

Oct. 24 Diesel: $3.36

Oct. 28 Regular unleaded: $2.35 Diesel: $3.32

SOURCE: AAA Nebraska

Source: Omaha World - Herald

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