Over Regulation and High Diesel Prices Affect the Transportation Sector
By: Lance Winslow
Well over the road diesel fuel is approaching $3.00 per gallon on its way to $4 with expected oil barrel prices of $85.00 by mid summer 2006. This of course is taking into consideration Hurricane Season Supply pressures and the Iranian nuclear weapons showdown. But meanwhile the Department of Transportation will not let up on the whole thing and the incessant over regulation.
What can we expect in this type of economic climate? Well what happened last time these factors came together? Well, we saw massive consolidation in the transportation sector. Lets flash back to 2001 and discuss what happened then. Here is an excerpt of an article I wrote during that period;
“US Express has bought six smaller trucking companies this last year while 1000s of smaller trucking companies folded due to increased fuel costs and Logistic Online help to improve efficiency. Now in the midst of all of this the OSHA people decided that 8 hours is all that should be allowed for truck drivers to drive. Citing Safety as a reason yet could not come up with any concrete evidence that fatigue was causing accidents. Probably Union PAC driven. Now there are road projects going full speed in many states due to surpluses from last years tax boom because investors realized increase tax liabilities from making money in the stock market, yet all that money is now lost in a year that ends with a tally as bad as the worst year in the 1970s. So with all this construction traffic is slowed, railroads hit hurdles due to UPS yelling foul for railroad consolidations even though UPS is one of their biggest shippers.”
You can begin to see how higher fuel prices and over regulation can set off a chain of severe storm events in any industry. And folks that is what we are about to see again unless someone in government figures out that we are hurting our nation with over regulation; high fuel prices from external events is one thing, but over regulation is quite another. Yet if you really wish to get technical the reason for limited refining capacity is due to over regulations, incessant lawsuits and over zealous environmentalism. So consider all this in 2006.
Lance Winslow