It is indeed about supply and demand. While the United States consumes 23 percent of total world consumption of crude oil, the emerging economies in China and India mean demand will only increase. And since the U.S. imports 60% of the oil it consumes (much of it from Canada, not the OPEC cartel) it's virtually impossible for the U.S. federal government to contain crude oil costs.
This increased demand (refined oil or petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics; the 16% not used for energy production is converted into these other materials) means we may hit an "energy crunch" by 2030 when demand exceeds production.
So, it doesn't matter if every truck in North America was parked, the increased demand for crude, along with a devalued U.S. dollar and the volatile oil futures market, will keep prices high.

 

Professor, if you will go over to the April 1 thread and read Gman's response. It explains exactly what I was trying to say. Maybe his fine written words will help you understand.

 

GMAN, I agree with what your doing, but I always wonder what defines a more quality service? Obviously, prompt and safe delivery of product, but I'm sure there are other things that an independant can do to set himself apart from the crowd. I would think that the shippers who are willing to pay a premium for their freight also very much expect this extra quality. No doubt, the JB's and Swift's have been there offering to cut the rates.

What are some of the things an independent can do to be sure they are providing the level of quality service that will make their customer "want" to do business with them, even if the rate may be a bit higher?

NOTE: Please understand this is in no way a wise-crack question, but genuine curiosity. I also understand that you may not want to divulge everything you know! LOL

 

BD,I do agree with what you just wrote, something so simple to do and yet most can't seem to do this.

 

Gman's comments from the other thread:
Things are difficult, but when you are in business, you learn to make adjustments to changing conditions or go out of business. What you and so many others don't realize is that much of what is happening with these high fuel costs is related to the government becoming too involved in our business. Government is NEVER a solution to an economic situation. Most of the time they are actually the cause, either directly or indirectly. The government benefits directly when fuel prices go up. One other thing to keep in mind is that it was the GOVERNMENT who allowed the major oil companies to merge, thus reducing competition. It was the GOVERNMENT who prohibited the oil industry to drill in known rich oil fields, thus reducing our dependency on foreign sources. It was the GOVERNMENT who failed to put a comprehensive energy policy together. It was the GOVERNMENT who would not allow new refineries to be build, thus reducing our capacity to process more oil and possibly reduce prices. I could go on, but I think you see my point. Besides, I don't understand what you really want the government to do about fuel prices

While I respect Gman's opinion that government involvement has made matters worse, it still wouldn't change the global demand and the shrinking supply. And without trying to hijack this thread, government does and should have a role that speaks to a country's environmental well-being, not just its economic needs. What would be better for all of us - economically and environmentally - would be to reduce our dependence on oil.
So what can truckers do? To steal part of Twilight Flyer's message: reduce idling and slow down. You'll save money and reduce demand/dependence on foreign oil, while reducing the impact on the environment.
I suppose I should at least acknowledge that the handful of parked rigs that participated in the "strike" at least produced less nitrogen oxide for one day, so something good did come out it, however small that contribution may have been.

 

Professor, It was his last entry that I was referring to.

 

Gman's last quote on other thread:
There really isn't a true supply and demand issue with the oil industry. Prices are controlled by a monopoly, OPEC. They can manipulate the market and prices at will, so the true market forces are not necessarily at work when it comes to prices. There is little true competition in the U.S. When the congress allowed the major oil companies to merge, competition was put at bay. If market forces were truly at play with current prices, then there would be a push for more refining capacity in the U.S. and more drilling. The government inhibits competition within the oil industry through public policy. They will not allow additional refineries to be built and prohibit drilling in what is believed to be some of the most fruitful sites in the world. There is also little done on the public side to encourage alternative energy sources. A lack of competition is the main reason we pay such a high price at the pump. Competition would bring prices down to a more equitable level.

There are a lot of people speculating in the market. That has resulted in rising prices. That has nothing to do with supply and demand. It has artificially inflated prices. At some point, the market is likely to correct itself and some of these people will take a bath in red ink.

Well, both comments make the same point, about the role of government, so I won't repeat myself.
But Gman's is absolutely spot-on when he talks about the role of speculators in the recent price spike, and without a doubt, many will get burned when the big players close out for a quick profit and the price of crude dumps. Crude will likely drop below $100 a barrel (it fluctuated between $99.80 and $105 today) but it's unlikely to return to his true cost of production because there are too many other factors at play in the global market.

 

That's from the AP stories that are circulating. Most say the same thing and that quote above is found in pretty much all the versions. In other words, more of the same schtick we see every year. As Yoda would say...'that is why you fail.'

:roll:

 

One of the most important things any trucking company can do is to make certain that you keep your word. If you commit to make a pickup or delivery by a certain time, then you make sure to do it. About 2 months ago one of my trucks broke down in Fresno, CA. We were under a load and I wasn't sure what was wrong with the truck. I had already committed to another load. Rather than not deliver the load or cancel the other load that I had committed, I rented a truck at a cost of about $800/week to fulfill my commitment. The shipper and broker were both extremely happy. Neither could believe that I would rent a truck to fulfill my commitment to them. I was told later that any time I needed a load to let them know. I made little, if any money on these loads, but kept my word and in doing so, gained a substantial amount of goodwill. I will do anything that I can to keep my word. In this case, the problem wasn't my fault. However, I did make a commitment. I felt that it was important for me to keep my word. That is only one example of what I mean by providing extra service. If this had happened to one of the larger carriers, they would likely have either tried to reschedule the load or re-power to suite their schedule rather than that of the shipper. While the problem would have been understandable, sometimes shippers operate on a tight schedule. If the carrier doesn't deliver as expected, then it can cost the shipper time and money.

The larger the carrier the more difficult it is for them to keep all of their commitments. It is much easier for a smaller company to keep their commitments than it is for a company with 1,000+ units. The more people with whom you deal the more difficult it is to maintain control over your business.

Shippers and brokers will sometimes pay a premium for a carrier who is dependable. Most will not waste their time with those who are not reliable.

One thing that I NEVER do is cancel a load once I commit to it. There are some carriers and/or independents who will cancel a load if they find one that pays more. That is bad business. It isn't good for anyone. It is difficult to build a good reputation. It takes little to ruin it. I am not saying that if you cancel a load, once committed that you will ruin your reputation, but it is something that a shipper or broker is likely to remember. But they also remember those who provide excellent service. By providing good service you establish good will and when a really good load comes along, then you will be at the top of the list.

If you provide excellent service you can command a higher rate. If you provide mediocre service then you don't deserve the better rates.