Question for my Owner Operator Brothers

I to made real good money last time fuel went to $5 a gallon but the work was there the economy had not tanked yet. This time around the economy is just to fragile to handle it. I will survive i have good customers but they can only pay so much untill they slow down, thats what happened last time at some point companys start to cut back and it will hurt us. You right Bill, i believe we will see big growth down the road 2 or 3 years but at what cost to the people.

 

I don't understand your question "at what cost to the people?".

Economic growth is good for all that want to be productive members of society. And great for those that want to prosper and make a better life.

Even if fuel keeps pace with inflation (and it hasn't over the past decades) we as a country will grow and prosper.

 

The current high fuel prices have nothing to do with "high demand" due to industries being busy. Tough to go much deeper into this without getting political, but that is insane to believe that.

 

I really like this thread and hearing all points of view since the views come from different parts of the country too. Good Job Road Warrior!

Some of the problems that you folks dont see because you dont live there is in the PNW. 5 dollar fuel was killing many of the local/ regional o/o off which of course is good and bad. It also put a big halt to log haulers which in turn shut down more mills. Not many jobs there right now and the ones that are there dont pay enough for the super high cost of living. 5 dollar fuel puts a lot of strain on a poor smuck who's barely floating along as it is. What you guys would call a decent wage as your cost of living is cheaper is what we call the working poor. I will still do ok but will watch my entire state pretty much shut down due to nobody can make it.

 

What i ment was what will it do to the way of life before we start to see the big upturn.

 

I agree with your statements except we will continue to grow and prosper. The problem here is how do we continue to grow and prosper? We (as a country) keep sending our manufacturing jobs out of the country so that in turn creates huge unemployment here. My state is one that is suffering greatly from huge unemployment already and now here comes higher cost along with lost growth and lost prosperity.

 

It is human nature to look at our own little world and say "My fuel cost will increase by over 25%. This is going to be bad, bad, bad."

But when you break down the difference between $4 and $5 fuel it adds very little to the end cost of a product. Not saying in times of over supply of a product that this little difference won't have a negative impact. But when we are looking at a growing economy this huge increase on our side means little to the end price of a product.

Real life example: Say you haul a product worth $25,000 500 miles. Using a FSC calculation with base fuel at $1.25 and 6 MPG, $4 dollar fuel is an FSC of $.46/mile. At $5 that is $.63/mile - and additional $.17/mile or $85.

Now GAAP says we add transportation costs into product cost so that increases the product cost by only .3%.

And yes, we can create examples of low dollar value loads taken long distance that will increase that number (a $10,000 load hauled 2000 miles will be 3.4%) but the point is our 25% increase does not impact the end consumer cost that dramatically.

Now in terms of planning your business. It really comes down to if you want to believe the talking heads on TV, talk radio and all the other media outlets that are competing in this 24-hour news cycle for your attention. (And you don't need a million dollar funded study from some University to know that bad news sells).

Or you can look at un-biased data and economic history to make your decisions.

We are in a slow recovery. We may slide back a bit but we have been moving forward. But our ADD society of "I want it now" wants to see things roaring back. But I have been saying for a couple years now that we need a slow, steady growth to have another long stretch of prosperity. If our economy comes roaring back there is going to be far too much speculation built into it. And speculation relies more on luck than sound business plans.

Just look at our industry - How many O/O's get into this business and fail? Most of these folks are speculating on what they can achieve in this business.

 

Bill your not looking at the whole picture. If consumer confidence slows down and if the consumer pulls back on spending because of the higher gas and energy prices thats whats going to hurt the economy bad. No consumer spending no goods to move or make. Right now energy is going higher on fear not supply and demand. Crude inventory rose this week but crude is up almost $2 today. Why fear by traders/speculators not supply and demand.

 

The week will fall & the strong will survive .Im strong in my field .