Consumers were shocked as the diesel prices suddenly took a progressive leap. The prices which have remained constant after the increase in the first quarter wasn’t expected to take a turn. However, in mid-April, consumers woke up to the sudden hike in diesel prices.
All regions of the US were affected by the hike; the West Coast felt the most hit by the hike in diesel prices more than the California region. The cheapest fuel is $4.916 per gallon in the Gulf Coast region. California sells the most expensive at a rate of $6.277 per gallon.
This is no doubt the most expensive the US has experienced since 2008. The lament about the hike is more on the part of direct consumers like the trucking industry. However, everyone is feeling the effect of the hike because the hike influences almost all nation sectors.
Causes of The Hike in Diesel Prices
The Russia-Ukraine war cannot be excused from the hike in diesel prices. The war resulted in supplies from Russia being cut off. According to Bloomberg, the surge in prices keeps soaring due to the war. While Bloomberg’s view is correct, the war made the situation worse.
The price surge is also as a result of the Covid-19 pandemic which affects the auto transport industry. However, with the resumption of industrial activities, demand for diesel has increased. This is because diesel is used for almost all industrial activities. The new surge in demand is more than the supply chain can serve.
The supply chain can’t fully cater to the demand adequately. In addition, the need for diesel isn’t at a static level. It keeps increasing as more workers go to work and more industrial activities kick-off.
Effects of The Price Hike on The Auto Transport Industry
The US President is making moves to curtail the current situation and bring it the problem under control. Firstly, directives were given for millions of barrels of oil to be released from the emergency stockpile. While this has helped a long way, it has not eliminated the effects of the sudden hike.
One significant effect of the hike in diesel prices is a change in consumer taste. Consumers now desire to acquire fuel-efficient vehicles. However, due to the shortage in semiconductor chip, brand new cars are not readily available for purchase.
Additionally, the hike in diesel prices affects several trucking companies . Consequently, this has affected the trucking spot rate. With the recent hike in prices, several consumers are concerned with the auto transport costs.
The rate at which new entrants are trooping into the trucking business hasn’t improved the situation. Some of these new entrants lack skill and experience. By implication, the tendency of these new entrants experiencing a market downturn is slim. The only way out for such companies would be to file for bankruptcy.
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