By Matt Whittaker / NewsBreak Denver
(Aurora, Colo.) Just south of the Airport Boulevard exit in northern Aurora, as the Front Range gives way to the plains, lies an oasis for truckers traveling the major freight corridor of Interstate 70.
They can fuel up at the Flying J Travel Center, eat at Denny’s or McDonald’s or get their rig serviced at McCandless Truck Center, where sales manager Adam McCandless could recently be found at his computer in an office with walls adorned with glossy truck posters.
The commercial truck and bus dealership, owned by his father, has a parts department and a fuel station. It’s been earning more money on fuel sales recently as diesel prices have skyrocketed to record highs, but it’s also finding it more challenging to sell fuel contracts because of the high prices, McCandless said.
With diesel prices in Colorado at or near record highs since March, McCandless is one voice in Colorado’s trucking industry calling for more domestic oil production.
He said it is “ridiculous” that the United States is importing oil. “Let’s get more domestic supply up,” he said. (Last year, the United States imported more crude oil than it exported, according to the U.S. Energy Information Administration.)
Why domestic drilling hasn’t kept pace
Republicans nationally have called for the Biden administration to allow more domestic drilling as fuel prices spiked as the Russia-Ukraine war roiled the global oil market.
Fuel prices were on the rise even before the war because domestic oil and gas companies weren’t drilling enough new wells to keep up with supply as the worldwide economic recovery from the pandemic generated more demand.
During the pandemic, some oil companies went out of business as demand for their product plummeted. Some wells were permanently shuttered. Also, workers left the business, making it harder for companies to explore for more oil.
Additionally, stock-market investors wanted oil and gas companies to spend less on production and use the money to pay down debt, boost dividends or buy back shares. The push to transition to renewable energy has also led to less oil production.
Meanwhile, the Biden administration paused new oil and gas leases on public lands, but that decision was blocked by a court ruling in Louisiana last year. As a result, last month, the Interior Department said it would post notices for oil and gas lease sales on federal land in nine states, including Colorado. Environmentalists have protested those sales in Colorado.
Oil won’t begin flowing from the parcels leased next month in time to put a dent in the higher oil prices of the moment. Companies can take years to explore, drill, and get pumps up and running. And production decisions hinge on what the price of oil is doing.
But oil companies already have permits where they are increasing drilling that will help ease prices in the shorter term. Rising crude prices have helped spur a national rig count increase to 728 from 455 a year ago, as of Friday, according to energy services firm Baker Hughes. Colorado’s rig count is up to 16 from 10.
Colorado diesel at record levels
On Friday, the average price for diesel in the state was $5.353, not far from the highest recorded average of $5.388 set on May 10, according to AAA. A year ago, the average price was just $3.21. Prior to the recent surge, the record was $4.8438 in 2008, said Skyler McKinley, spokesman for AAA Colorado.
Although the state is some ways away from the inflation adjusted 2008 record of $6.50, that’s probably little consolation to owner-operators struggling to manage a fill-up for $1,500 that used to cost $700.
Even though truckers can charge more as fuel prices rise, they’re generally only able to apply it after a time of higher prices, said Gregory Fulton, CEO of the Denver-based Colorado Motor Carriers Association, a group that represents the state’s trucking industry. But when prices come down, their customers want them to pull the surcharge off immediately.
That means rapid moves higher in diesel prices make it especially difficult for smaller owner operators who can’t get the fuel deals at truck stops that larger fleets can, Fulton said.
Allowing greater domestic oil production “would significantly help” push down prices, Fulton said.
Meanwhile, truckers are reducing the time they idle at truck stops and using lower rolling resistance tires and trailer skirts to lower the amount of fuel they burn, Fulton said.
“We're making vehicles more efficient,” he said.