Carrier survival tips: Part 2

by David Bradley

A question that I have been asked a lot lately by both carriers and owner/operators is:What are the associations doing about the high price of diesel fuel? Or more specifically: Are we lobbying government to do something?

Short of trying to convince NATO to send the tanks into Saudi Arabia and taking control of the oilfields, what can the associations do?

Seriously, I understand full well the impact escalating fuel costs are having on carriers and owner/operators. But, In terms of fuel pricing, there is really nothing to lobby government on.

If there was, we would. And, once we solved that we’d move onto correcting the Canadian dollar and reinvigorating the US economy. Fuel prices are set on the world market. OPEC is a cartel. They have the oil and if they want to control supply to keep prices at a certain level they have the power to do it. There have been countless investigations into price fixing by the oil producers in North America, none of which have amounted to anything. Making huge profits is not against the law.

Canada has oil, but it too is sold on the world market. You may recall the National Energy Program from about 25 years ago which was designed to allow Canadians access to “our” oil at cheaper than market prices. The program was a political (Let the eastern bastards freeze!) and economic disaster for the country. No government, or party hoping to become a government, would contemplate such a policy again.

Some provinces have regulation over fuel pricing. It doesn’t mean that fuel is any cheaper, but it is supposed to smooth out the daily price swings. The reality is it accomplishes little and can mean it takes longer for price decreases to show up at the pumps. Taxes are part of the price of fuel, and we do lobby for reduced taxation on diesel fuel at both the provincial and federal level either through elimination of all or part of the taxes or through harmonization with the GST so truckers would get a tax credit.

However, governments don’t like to give up revenue. The best I can say is that we have not had an increase in the Ontario fuel tax, for example, in 17 years and the federal excise tax has not changed in about two decades. Even if we were successful in eliminating or reducing these taxes, some argue the oil producers could just fill the gap by raising prices anyway.

Also, be aware that more governments have or are considering increasing the taxes on fuel by introducing carbon taxes. Quebec did that last year and the new tax has flowed through to prices. B. C. just announced in its recent budget that it too is introducing a carbon tax.

The federal Liberals are openly talking about a national carbon tax.

We need to look at other solutions. The industry still has a very useful tool in fuel surcharges. And, while these have come under some pressure lately, they are here to stay.

The other increasingly important and unavoidable solution is conservation and improved fuel-efficiency. For carriers and owner/operators the challenge exists today – become more fuel-efficient or add risk your business.

It’s as simple as that. The associations are also active on this front, and not only by supporting the activation of speed limiters. Our enviroTruck initiative (which is really all about getting incentives for fleets and owner/operators to invest in fuel efficiency devices) is starting to get some traction, as they say.

I hope this gives us all something to think about. Again, price – whether freight rates or fuel prices – is market-driven. It’s all about controlling costs in a soft market.

– David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.

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