Spike in diesel prices could drive up cost of goods, says Wisconsin trucking leader

The owner of a Wisconsin trucking company says higher fuel costs are just one of the ways that the war with Iran is likely to impact her operations and, ultimately, consumer prices.

In Wisconsin, the average price for a regular gallon of gas hit $3.15 on Monday, up nearly 40 cents from last week, according to data from AAA. That’s also 20 cents higher than gas prices were at this time last year.

Crude oil prices dropped heading into Tuesday, but analysts say the market will keep fluctuating if there are mixed messages from the Trump administration on the timeline for the Iran war.

Diesel prices have also gone up in the last week. In Wisconsin, the average price jumped more than 50 cents, from $3.76 per gallon last week to $4.30 currently. According to the latest data from the U.S. Energy Information Administration, the average price of diesel in the Midwest region as a whole is up a full dollar from last week.

“A one-dollar increase in a week is a lot to absorb,” said Pam Polyak, who owns Polyak Trucking, a cargo and logistics company based in Waukesha County. “It’s a drastic spike just in this week’s time that will easily take 30 to 45 days to recover from.”

Polyak joined “Wisconsin Today” to talk about diesel prices and what she’s seeing in the trucking industry.

The following interview has been edited for brevity and clarity.

Rob Ferrett: We’ve got this $0.50 spike per gallon in diesel. How big a deal is that for your business, for the trucking industry, if we saw persistent increases in diesel like that?

Pam Polyak: It’s a quick turnaround in terms of the pocketbook, right away. We have to pay for fuel in order to run the load. So although we wait 30 days to get paid for the load, it’s the concept that we’re buying the fuel right away to even make that trip to begin with. 

The U.S. Energy Administration came out today saying the Midwest average for diesel is $4.80, which is up an entire dollar from last week at this time. … So now this week, our rates will increase based on that number, but we’re not getting paid for another 30 days. 

Being a local carrier here in Wisconsin, each truck averages about 350 gallons a week, and we run local — Wisconsin, Illinois, that type of market. So if you’re putting in about 300 gallons, and you’re up $1, the math is simple on that one. We’re dishing out a lot more and faster than we’re getting the money in.

RF: Somebody might be thinking, “Well, I don’t put diesel in my car, so this doesn’t really affect me.” But just about everything we buy is brought on a truck, or maybe a diesel-powered train. These things translate into costs for consumers.

PP: One hundred percent of the time. It’s the idea of: if the customer is turning around and spending $20 to $30 more on a load, that amount will then trickle down to the end-user and consumer, eventually. Is it a magic switch? No. But it’s that entire idea of things costing more.

We also have a secondary thing that’s happening out in the Middle East. Because of everything that’s happening right now, containers are getting stuck out there. So we’re going to start seeing a very post-COVID type era where shipping containers are sitting in the middle of the ocean, and we don’t have access to them, meaning the trucking companies who need to haul the freight. So if things don’t turn around fairly quickly, we could run into a situation where your washing machine is now taking six months to get to you.

RF: This is just early days here. What would be the timeline where trucking companies like you start to see fewer orders? Where you’re less booked up because that stuff is stuck at sea?

PP: We could probably see it in the next two to three weeks, I’d say.

From a Wisconsin standpoint, it doesn’t hit us quite as quickly. It’s the West Coast and East Coast that sees it first — those are your giant hubs. Our closest hub is Chicago, and obviously that’s not necessarily directly coming off of ships. That’s all trains. So it takes a while for the Midwest to really see it. But depending on exactly how long this takes, we could end up seeing ships stuck there for weeks at a time, and then things aren’t moving nearly as quickly, and the ripple effect will hit the Midwest eventually if things don’t start to turn around.