diesel gas prices impacting inflation on nearly everything
It's a new week and prices at the pump are coming down once again. AAA reports that regular gas prices are down $.62 cents a gallon for in the last five weeks in Florida.
The problem becomes obvious when you look over and see diesel prices. They aren't seeing the same decrease, and at well over $5 a gallon, it's a problem for everyone, even if you aren't pumping it yourself.
"We use these machines to crush concrete, we do demolition," the owner of Central Hauling and Excavating Herb Maharaj explains. "The crushed material has to get to the market for the customers."
The excavator and heavy lifting construction trucks use red diesel fuel. It's about $.50 cents a gallon less than green diesel fuel, which is more commonly purchased at gas stations. He goes through about 2000 gallons a week of red diesel on his heavy duty machines. His 11 dump trucks use green diesel, and use 75 gallons a day five days a week.
Add that to fuel costs being about 40% more than this time a year ago, Maharaj is hurting.
"Right now we are working on about a three percent profit margin," Maharaj says. "If we have any breakage, the profit is out the window."
The industry standard profit margin for a business like Maharaj's is about 10-15%.
Former corporate and executive branch economist Tom Fullerton is now a professor at the University of Texas at El Paso. He says part of the reason diesel demand is higher than gasoline demand is because of the ongoing supply chain shipping demands.
"Businesses are trying to play catch up in terms of their inventory," Fullerton says. "So the demand for cargo trucks, railroad, and ocean-going vessels is very high."
Meaning shipping and transporting everything is costing a lot more with high diesel costs.
"In 2022 it is definitely contributing to higher prices and inflationary pressures with in the United States," Fullerton told Spectrum News.
Maharaj is already feeling pressure.
"If it goes on longer than the end of this year, I am going to have to downsize," Maharaj said. "Probably cut the company in half or close it down completely."
Regular gas prices may offer some relief, but in the end, nearly everything else is still going to cost more.
Professor Fullerton says diesel prices are likely to level off between now and Labor Day. Then, after Labor Day is when we can notice the diesel prices go down like we are seeing with regular gas.