Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, September 21, 1993                   TAG: 9309210028
SECTION: BUSINESS                    PAGE: B6   EDITION: METRO 
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE:                                 LENGTH: Medium

MOST TRUCKERS DON'T PLAN TO EAT NEW FUEL COSTS

Managers of local trucking companies say they'll pass along to shippers some of the increased costs, effective Oct. 1. But stiff competition and low profit margins will make the going rough.

President Clinton's budget package, passed by Congress in August, adds 4.3 cents a gallon to the federal tax on diesel, raising it to 24.4 cents. A law requiring a lower-sulfur diesel fuel will tack up to 7 cents more onto the cost of a gallon, the American Trucking Association estimates.

The combined impact on the U.S trucking industry has been estimated at about $3 billion a year.

The average motorist also will feel the pinch. The federal gasoline tax will rise from 14.1 cents per gallon to 18.4 cents.

Earlier this month, the ATA petitioned the Interstate Commerce Commission for relief, asking that truckers be allowed to pass on the increased costs to shippers more easily.

"We don't feel we'll be able to eat [the added costs]; they'll have to be passed on," said Bill Bumgarner, manager of Fleetmaster Express, a Roanoke-based hauler.

The company's long-term contracts - one to five years - have fuel-adjustment clauses that will let at least part of the added cost be passed on, Bumgarner said.

The published rates, or tariffs, will have to be increased, too, he said. But shippers, who have grown accustomed to low rates since deregulation, have a strong resistance to price increases regardless of the cause and will go out and shop for a cargo carrier that won't pass on the increases, he said.

To prevent damaging competition, the trucking association asked the ICC to consider among its options a requirement that all interstate trucking companies pass along the fuel increase in their rates. The ATA also asked that the ICC reopen all transportation contracts between truckers and shippers in order to address the higher costs.

Ken Siegel, deputy counsel for the ATA, said late Monday that the ICC hasn't yet considered the association's petition. "All we're getting is word of mouth that they're looking at it."

Fuel is his company's next-to-highest cost, behind drivers' wages, said Bob Davis, president of Harris Trucking in Lynchburg, a hauler of heavy commodities operating 160 tractors.

The fuel tax is a harsh one for transportation companies, Davis said. It is equivalent to increasing his company's income tax rate 30 percent or more, he said.

Harris Trucking has a fuel clause built into its contracts, but cost adjustments usually trail actual cost increases, Davis said. Because fuel prices have remained fairly steady for two years, the level at which fuel clauses kick in is so high it will not allow recovery of all the anticipated cost increases, he said.

The tax and fuel cost increases eventually will find their way to the consumer, Davis said.

Truck-stop operators say drivers haven't been talking much about the increases.

Company drivers don't have to deal directly with increases, although they may see the effect in their paychecks. Independent drivers may think complaining wouldn't make any difference.

Ted Doyals, an independent trucker from Weatherford, Okla., said he pays about $11,000 yearly to fuel each of the two trucks he owns. He figures the new tax and low-sulfur fuel will cost him another $4,000 each.

President Clinton "took everything a small businessman like myself had," said Doyals, who stopped Monday at Truckstops of America in Troutville to use the telephone.

Truckers are going to have to be subsidized like farmers, said Russell Weaver, an independent trucker from Reno, Nev., as he fueled up at the truck stop.

Weaver knows how he'll have to eat the increased costs: "I'll just get out a lot of salt and pepper," he said.

\ THE NEW TAXES

The federal motor fuel tax on Oct. 1 will affect gasoline, diesel fuel and jet fuel. The typical U.S. motorist will pay 38.6 cents per gallon in state and federal taxes, meaning about 35 percent of the pump price will go to government levies.

Virginia motorists will pay 17.7 cents in state taxes, 18.4 cents in federal tax, for a total of 36.1 cents per gallon. In West Virginia, state taxes will be 20.5 cents, for a total of 38.9 cents. The North Carolina tax adds 22 cents, for a total of 40.4 cents.

Source American Petroleum Institute