I don't know anyone that has a crystal ball that can predict what will happen with fuel prices in the weeks and months ahead. There has been some recent moderation in rack prices, but not enough to of...
I don’t know anyone that has a crystal ball that can predict what will happen with fuel prices in the weeks and months ahead. There has been some recent moderation in rack prices, but not enough to offer sufficient relief to carriers and owner/operators that depend on stable fuel prices. (Retail prices, for the record, have not backed off at all.)
Rack prices for diesel across Canada are still more than double what they were in early 1999, with most of the impact being felt east of the Ontario/Manitoba border.
In large part this is a worldwide phenomenon. But it seems to me that just a few years ago the United Nations was involved in the Gulf War, supposedly to protect some of the same countries that are now constraining the supply of crude, driving up the prices. Some thanks.
The oil companies’ explanation for why diesel prices rose above the price of unleaded gasoline for the first time in history – a supply-demand imbalance brought on by a run on home heating oil and limited supply – is hard to swallow. Surely they knew that January tends to be accompanied by cold temperatures in North America. And that the economy was continuing to create a strong demand for fuel.
But what are we to do? Regulate? Even if they had the stomach for it, do we really want governments meddling in the marketplace any more than they are? Remember the infamous National Energy Program?
Speaking of governments, we’ve seen a lot of finger pointing and ducking for political cover, but not much else. On the day that I sat down to write this column, the federal industry minister announced yet another study of the oil industry to be completed by the end of the year. But, it won’t deal with diesel. The Ontario government task force on gas prices was continuing to stumble its way towards its report.
One thing that governments can do to help – if indeed they are serious about helping at all – would be to provide relief from the excessive taxation of diesel, if only on a short-term basis. Today, more than a third of the commercial price of diesel fuel is made up of provincial and federal taxes. For too long, fuel has been taxed as if it were a luxury and transportation has served as an enormous cash cow. But I wouldn’t expect relief in the short term.
So where does this leave the industry? Essentially, on its own. But that may not be all bad. We may even look back upon this latest crisis as a blessing in disguise. Perhaps after years of depressed rates, combined with increases in many costs, the industry will begin charging a fair price for its services.
Unless the trucking industry begins to generate sustained revenues sufficient to earn reasonable rates of return, the available supply of trucking services will inevitably shrink. For the survivors this might not be such a bad thing in the short run. However, it could also have a profound impact on Canada’s economic growth. In that case, everyone loses.
Another observation: We are fortunate to live in a democracy that allows for free expression. In recent weeks, truckers clearly caught the public’s attention. But public support can quickly evaporate. Government is unlikely to negotiate if it feels a gun pointed is at its head. The reality is, to make lasting change, we must be prepared to invest time in the democratic processes. No matter how cumbersome and glacier-like the progress may seem.
As an industry, we must work together to solve the industry’s problems. We must try and bring a unified industry voice before government and the public. Otherwise it is divide and conquer.
The associations I represent are corporately funded. We have, therefore, a corporate agenda. However, I do not believe that pursuing this agenda is inconsistent with the hopes of most industry stakeholders. The Canadian trucking associations exist to help create the business environment in which all can prosper. Some, for example, already have forums that allow for owner/operator and driver input. I cannot do my job unless I have a firm grasp of everyone’s concerns.
I recognize that what Canada’s trucking associations offer may not be everyone’s cup of tea, and at the end of the day we exist to serve the carriers who pay our bills. But what is good for the industry is usually good for most carriers and vice-versa. Lower taxes, fair regulation, a level playing field, improved highway safety, more investment in highway infrastructure, more respect for the industry. These are the things we stand for.
We admittedly have our limitations. We cannot solve every individual concern. We are constrained from becoming directly involved in the management of our members’ businesses. For example, we cannot and do not negotiate prices and rates on our members’ behalf.
But we have a proven track record of effectively working for change within the system. We can all work together for that. n
– David Bradley is CEO of the Canadian Trucking Alliance.