Biodiesel Backs Off
The Obama Administration is significantly paring back Biodiesel requirements for all fuel distributed in America. This was foreshadowed in October of 2013 when a preliminary report was leaked and suggested that the Administration was going to lower the requirements for Biodiesel fuel nationally. The reason? Not, regrettably, concern for the high cost of fuel on Truckers everywhere but rather the potential for a fuel crunch in 2014. According to the Environmental Protection Agency, the country was approaching a point where the so-called Renewable Fuel Standard (RFS) would require the use of more ethanol than can be blended into gasoline at the 10 percent level that dominates the U.S. fueling infrastructure (Reuters, 2013).
The blending of renewable fuels (mainly ethanol, but soybeans, grasses, crop waste, etc. can be used) and standard diesel fuel was reaching what refiners call a "blend wall." There isn’t enough ethanol to blend and refiners would be forced to export more fuel or produce less gasoline, leading to shortages and higher prices at the pump.
How scared of a fuel shortage is the EPA? The EPA set 2014’s renewable fuels usage at 15 billion to 15.52 billion gallons. That is less than 2013’s 16.55 billion gallons and significantly (close to 20 percent) less than the 18.15 billion gallons that the original law required for 2014.
Truckers, Turn Off Your Engines
This year is the first full year for the Federal Motor Carrier Safety Administration new Hours of Service (HOS) rule. The new rules retain the 11-hour daily driving limit from before, while reducing the maximum hours a driver can work in a given week by 12 hours from 82 to 70 hours per week. There is also a mandatory 30-minute break during work periods of eight hours and all drivers who have maximized weekly allowance must have at least two nights of rest when their bodies demand it most, between the hours of 1:00am – 5:00am. It is part of the “34-hour restart” provision that allows drivers to effectively restart their work week (once per week), after taking 34 consecutive hours to rest. Company violators of the 11-hour daily maximum can be fined up to $11,000 per occurrence, with drivers personally liable up to $2,750 per offense.
The implications for firms are fairly straight forward and not beneficial—reduced productivity and higher costs. Legal shipping routes will become illegal, firms will need more drivers (despite a current shortage of some 200,000 nationally) which means increased wage costs. It could also push some of the larger firms into the Patient Protection and Affordable Care act (so called ‘Obamacare’) if they pass the threshold of 50 employees. Trucking is not a wide margin business (5 cents on the dollar for most firms) and some, if not all, of these increased costs will be passed on to the customer. That’s bad timing given the 2014 economic outlook isn’t very strong and transportation got a black eye over the Christmas season when UPS and FedEx failed to anticipate a surge in demand resulting in late deliveries.
Ostensibly, the good news is drivers will be more rested and safer with the new rules. However, the American Trucking Association noted that in 2012 trucking-related fatalities were down nearly 30 percent under the old 2004 rules.
If it ain’t broke, don’t fix it FMCSA.