‘Throwing dollars out the window’: Diesel spike hits truckers and farmers, with consumers in the crosshairs

Drivers wincing at $4.70-per-gallon average gas prices statewide may not be paying attention to similar spikes in diesel now, but trucking representatives warn the collateral damage is coming.

A gallon of diesel that cost an average of $3.75 a year ago in Illinois was $6.72 as of Friday, AAA reported

“It’s painful right now,” Mid-West Truckers Association Vice President Matt Wells said.

“Ultimately, our industry will eventually have to adjust rates to a point where we can continue to pay our employees, and make our payments, and do the things that business does — but that’s going to trickle down very quickly to the consumer.”

For Barrington trucking executive Mike Moran, the hike comes down to almost $1 for every mile his employees drive.

“When I talk to my drivers about fuel efficiency, I say, ‘Hey, take some money out of your pocket. Every mile you drive, throw a dollar out the window and see what it feels like.’ That’s what we’re paying,” explained Moran, president of Elk Grove Village-based Moran Transportation Corp.

The escalation is so extreme that the Mid-West Truckers Association appealed to Gov. JB Pritzker to pause the state’s motor fuel sales tax.

“The state should consider an emergency suspension or reduction of the applicable state sales tax on motor fuel, where legally authorized, to provide immediate relief at the pump,” Wells wrote Pritzker.

He told the Daily Herald, “We’re one of the very few states that do a motor fuel tax and then a sales tax on top of the motor fuel tax. That’s 35 cents a gallon just in sales tax on a gallon of diesel. And it’s not flat. It keeps going up.

“For every gallon of diesel a semi truck driver puts in his tank, and it takes 300 gallons to fill up a semi, that’s $100 in sales tax,” Wells noted.

Pritzker’s office had not responded to a request for comment as of Friday.

Energy is one of the top expenses at Moran’s company, so when diesel doubles in price it has a massive effect on cash flow.

“It destroys our margins. It takes any profitability that we might have had in the marketplace,” he said.

“And now, we’re having to run as tight as possible. I can’t afford to run half a load somewhere. I have to wait for the next day until I get it full,” Moran added.

Moran’s company transports everything from food and clothing to medical supplies and raw materials.

To offset losses, the industry has and will be raising prices, which is going to affect a wide swath of Americans, truckers said.

“Everything in this world moves by truck multiple times. By the time we get it in our hands, it’s moved somewhere between three to six times,” noted Moran, who is Barrington’s village president.

“The cost of buying your groceries for Thanksgiving dinner, having your items shipped to you for Christmas, all those costs are going to go up,” Wells projected.

Geopolitical, local fallout

Conflicts in the Middle East and Russia’s war on Ukraine had already spiraled fuel prices, said Patrick De Haan, head of petroleum analysis for GasBuddy.

But a Will County oil refinery going offline in mid-September because of a power outage exacerbated the situation for Chicago-area residents, he explained.

It resulted in a surge in gas and diesel costs locally, and “although the oil refinery has returned to service, the impacts are still unwinding,” De Haan said.

“That is why diesel has gotten close to $7 a gallon. But it’s now started to decline along with gas prices.”

Geopolitical tensions will continue to drive the issue, he added, declining to offer a prediction.

“If we see more escalations, prices may continue going up. Alternatively, if we see de-escalation, those prices may go down.”

Farmers facing fuel crisis

With harvest season here, the timing couldn’t be worse, said Woodstock farmer Chris McKee, who grows corn, soybeans, wheat and hay as well as keeping cattle and hogs.

As they gather crops, farmworkers are using the “combine, a couple of tractors, and a couple of semis, also. So we’ll burn in the neighborhood of 500-600 gallons a day of diesel fuel,” said McKee, McHenry County Farm Bureau president.

The diesel crisis comes after farmers are already reeling from soaring fertilizer prices related to the U.S. war with Iran.

“We can change different things and price different ways of doing things out with fertilizer and seed, but diesel fuel’s the one thing we can’t do that with,” McKee noted.

“There’s nothing we can do about it,” he said. “We just push forward and figure out how to be more efficient.”

mpyke@dailyherald.com