By Michael Hooper
The Capital-Journal
Published Thursday, November 20, 2008
November marks the fourth consecutive month of falling gasoline and diesel prices in the state and nation, but why is no one cheering?
Because the economy and financial markets are tumbling.
Print E-mail Comment
Anthony S. Bush / Topeka Capital-Journal
The drop in diesel prices came too late for many truckers. Hundreds of U.S. trucking companies went out of business this year.
Anthony S. Bush / Topeka Capital-Journal
Melvin Stevens says he quit running his own truck when gas diesel was at $5 a gallon and it cost him up to $700 to fill up. On Wednesday, he filled up a truck for the company he drives for — Glass Trucking out of Newkirk, Okla., for $215.74 — just east of Topeka.
Click Thumbnails to View
"In a better economy, people would be more excited about it," said Dan Chavez, part owner of Chavez Restoration & Cleaning.
Businesses, governments and consumers are all saving money because of the 50 percent drop in fuel, but they are only making up for the high prices they paid earlier in the year.
Chavez Restoration & Cleaning saw its fuel expense fall to $4,750 in October compared with $8,000 in June.
Chavez said the company provides restoration and cleaning services within a 90-minute drive of Topeka. When fuel prices skyrocketed in the spring, he said, it hurt business.
"The timing (in the spring) was not ideal because we had a couple of jobs in Manhattan and Seneca," Chavez said. "It was hurting a lot. But you don't have a choice, the work has got to be done."
Some Topekans may think they are insulated from the national economic crisis, but Chavez said it doesn't take long for it to cycle down to Topeka.
"I haven't seen things like this before," Chavez said. "The gas price drop has helped, but business has a cloud over it."
Chavez Restoration & Cleaning has more than 30 employees and 25 vehicles that clean fire and smoke damage, mold and carpets.
In June, when fuel prices were reaching record highs, the city of Topeka was expected to be $812,000 overspent by year end. After fuel prices fell, the fuel budget is expected to be $520,000 over its $1.24 million budget.
"We've made up some ground," said Ron Raines, fleet manager in charge of the city vehicles' fuel.
The budget was supposed to be $1.24 million for the city's 1,100 vehicles, but because of higher-than-expected fuel prices, the city likely will spend closer to $1.8 million on fuel.
Raines said the city fleet budget is developed two years ahead of time and was expecting average fuel prices to be $2.35 a gallon for diesel and $2.15 for regular fuel. Regular fuel is much less than $2.15 today; Quick 2nd Stop at S.W. 6th and Lane was selling regular fuel for $1.67 per gallon.
But nationally, diesel is still much more expensive at $2.97 per gallon. The price of diesel has fallen nearly $1 per gallon in the past month.
"If low prices last for two or three months into next year, I would feel a lot better," Raines said.
Last spring, $4 regular fuel and $5 diesel caused a lot of damage as more than 2,500 U.S. trucking companies went out of business this year, said Tom Whitaker, executive director of the Kansas Motor Carriers Association.
Diesel fuel prices are still 22 cents higher than a year ago.
"They're still high," Whitaker said.
Whitaker said diesel fuel demand remains strong worldwide, while gasoline consumption has declined.
He said the economy is tough going for the trucker today as the freight market is soft.
"It puts the carrier in the position to cut costs," Whitaker said. "And the shipper (the customer) is often negotiating for lower rates."
He said truckers welcome the lower diesel prices from the spring highs.
"It helps, but it is not enough," Whitaker said. "We could use a strong economy, which would mean more freight to move."
Michael Hooper can be reached at (785) 295-1293 or
michael.hooper@cjonline.com.
