Getting over a barrel: smart driving saves as fuel costs rise.

• Author: Ostermiller, Pamela
• Position: Transportation

Unless you lived in a black hole in 2004, devoid of television, radio, the Internet and gas stations--where you would have noticed a pain in your pocketbook region--you know that oil, specifically the soaring price of it, was the top business story of the year. High fuel costs hung over our heads, influencing everything from travel plans to the stock market to strategies in Iraq. On December 30, 2004, the last trading day of the year, oil prices were down $1.08 at $42.56 a barrel--around $10 higher than last January, but $13 below the October 25th all-time high of $55.67. But forty bucks a barrel is still high compared to historical norms of under $20 (adjusted for inflation) still, prices look to stay high into 2005. According to Reuters, "the oil price outlook for early [2005] hinges on U.S. weather, which will dictate heating oil demand in the Northeast, the biggest market for fuel."

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The challenge, then, is doing business in this climate. High oil prices increase inflation through higher energy and transportation costs; they can push up interest rates and hamper economic growth. The freight industry--interstate trucking, as well as businesses that deal in or rely on the transportation of goods--is greatly affected by oil. High prices, in addition to environmental issues, mobility, and state and federal legislation, force new ways of thinking and creative solutions like the use of new technologies to combat these rising costs.

"Our industry is getting pretty vital right now," says David Creer, executive director of the Utah Trucking Association, emphasizing that a high demand for freight carriers is hampered by a shortage of drivers and backorders of new vehicles. "The freight industry is an essential part of commerce, and high oil prices affect the whole delivery chain." Creer admits the first way the industry deals with spikes in fuel costs--a variable cost--is to pass them on to the customer through surcharges, "but they [carriers] don't always get paid and costs can change quickly, can go up the next hour."

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Another problem faced by the trucking industry and companies that use fleets (such as FedEx and municipalities) is one encountered by all motorists: mobility. Getting from Point A to Point B as quickly and efficiently as possible saves not only time, but also money. "Congestion is really costing us all a lot of money," says Creer. "Delays in the movement of...