Diesel Price Spike Threatens To Lift Wisconsin Grocery Bills
Rising fuel costs for truckers and milk haulers could feed a new round of inflation for consumers statewide.
Trucks.
Just like regular gas prices, the price of diesel has skyrocketed over the past month in response to the war in Iran.
But many Wisconsin businesses don’t have the option to cut back on fuel purchases, including milk haulers like Tim Neubauer in Sparta.
“We haul milk every day of the year,” said Neubauer, whose business operates 38 milk trucks throughout Monroe County. “We have to fill our trucks with fuel every day, and we’re just at the mercy of the price of diesel fuel.”
The average price of diesel in the Midwest is $5.10, according to the latest data from the U.S. Energy Information Administration. That’s $1.31 higher than before the U.S. and Israel first launched major attacks on Iran at the end of February.
Diesel prices across the U.S. increased dramatically in March, leading to higher costs for trucking companies and other businesses. Source: U.S. Energy Information Administration
Patrick De Haan, head of petroleum analysis at Gas Buddy, said diesel prices have risen even more dramatically in coastal states, which have a stronger connection to the global market.
“Diesel is also produced in smaller quantities than that of gasoline, and that’s true universally,” De Haan said. “So diesel is seeing a lot more of the price appreciation along with jet fuel, which is also produced in lower volumes than gasoline.”
Actual prices at the pump have varied across the state and even from gas station to gas station.
De Haan said the way gas stations set their prices isn’t straightforward. But locations that are selling large quantities of diesel, such as truck stops, are likely paying closer attention to the market rate for fuel.
“Some of the mom-and-pop stations that are concentrating on selling gasoline and their local convenience store aren’t watching the price of diesel, because they may only be selling a few gallons a day,” he said. “Truck stops are buying tanker trucks of diesel every day, so they’re likely to have to pass along the increase much faster.”
The rising fuel costs have been extra painful during annual spring weight restrictions on many rural roads, according to Neubauer. He said milk trucks are forced to make more trips because of the so-called road bans.
“With the high diesel price, that’s costing a lot more money,” he said. “But now the road bans are coming back off, so we’re going to get back to normal and that’ll help.”
Neubauer, who is board chair for the Wisconsin Milk Haulers Association, said he and other hauling companies are able to pass along the higher fuel costs through fuel surcharges in some of their contracts.
He said those increased charges are often passed on from the milk processors to the dairy farmers through lower milk prices, which are already at low levels.
But Neubauer said he’s considering raising his rates to make up for the higher cost of doing business.
“Even if the war ends, it’s going to take a long time for that to get back where it was,” he said. “Then again, who knows if they’ll go back down to the levels that they were. That’s another scary thought.”
De Haan said higher fuel costs will likely be passed on to consumers across many industries, leading to a resurgence of inflation in the coming months.
Higher diesel prices in Wisconsin will likely trickle down to consumers was originally published by Wisconsin Public Radio.
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