TRUCKERS FEEL PINCH OF NEW TAXES ON DIESEL FUEL

October, the first month of the final quarter of 1993, was the start of something new for the trucking industry:

New taxes on fuel.

A new low-sulfur diesel fuel.

And new prices on the new diesel fuel.

Those turn of events all go together to cut into U.S. trucking industry profits

One of President Bill Clinton's deficit-cutting tax hikes resulted in a 4.3 cents per gallon increase on gasoline and diesel fuel taxes, effective Oct. 1.

That was bad enough, say area motor freight companies. Add to that a provision of the federal Clean Air Act calling for low-sulfur diesel fuel on the nation's highways, and retail diesel fuel is costing truckers from 25 to 30 cents a gallon more.

"Our records for October show that our fuel costs averaged 30 cents a gallon over September," said Kermit Meystedt of Genesis Truck Co., a Cape Girardeau motor freight firm with 35 tractor units.

Meystedt explained that the added costs resulted from a combination of two factors: the federal deficit-cutting package and the Clean Air Act regulation.

"We're a small carrier," said Rick Tidwell, owner and manager of Able Transportation near Millersville. "We don't run but 10 trucks, but we can certainly tell a big difference over the past quarter, especially in October."

Meanwhile, the added costs haven't been as noticeable to one trucking firm which has mostly local runs.

"Prices have increased some locally," said Dale Tidwell, who operates 15 trucks out of Fredericktown. "But they're not as noticeable as the rates you find in California, Arizona or Chicago, Ill."

Fred R. Wilferth, president of United Distributing Co., 101 N. Kingshighway, explained the environmental laws under the Clean Air Act concerning diesel fuel.

"The simple fact is that a lower-sulfur fuel must be used for highway driving," said Wilferth. "And the new lower-sulfur fuel is more expensive."

Wilferth explained that the wholesale price differential between the high-sulfur and low-sulfur fuel is about 10 to 12 cents a gallon in the area. "It ranges from area to area," he said.

Meystedt agreed. "We run the West Coast a lot," he said. "In California, diesel fuel from serve-yourself retail pumps ranges from 35 to 45 cents a gallon more."

Wilferth said high-sulfur fuel can still be used off the highway. "We still sell the high-sulfur fuel for agriculture uses," he said.

Motor freight companies are warned against using the high-sulfur fuel on the highways, said Wilferth. "Authorities say penalties for violations will be severe and "they are checking diesel-burning vehicles -- trucks and cars -- on the highways."

An "after-effect" has been noted in some engines. The low-sulfur fuel is not supposed to harm engines, but in some instances some problems with engine O-rings have been observed.

Meystedt said of the increased costs: "We average about five miles per gallon. We average 125,000 miles per tractor per year. What this translates into is about $7,500 per year per tractor.

"With 35 tractor units, the additional costs will result in about a quarter-million dollars more per year for our company, said Meystedt.

"This is a very significant cost figure," Meystedt said. "And the answer to overcoming these costs is not to increase new business; that simply adds to the cost."

Meystedt said he was hopeful of avoiding freight rate increases but in the future it will probably be necessary. "We can't continue to absorb those kinds of costs," he said, adding that freight increases have a snowballing effect "all the way to the consumer who picks up a product on the shelf."

Rick Tidwell agreed. "Freight rates haven't increased much during the past six years. We haven't had a rate increase since we started six years ago. During that same time we've had to absorb a lot of added costs. We have just about absorbed out."