Gas Tax Hikes & Truck Reservation System | Weekly News Update

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Alabama’s Gas Tax Hike Signed into Law

Proposals for diesel and gas tax increases have been making more headlines recently.  The latest state to do so is Alabama.  Alabama’s Governor Kay Ivey signed a tax hike into law this past week, which will be the first tax increase for the state since 1992.  The plan is to raise state tax on gas and diesel by 6 cents per gallon on August 31, 2019, followed by an additional 2 cents increase on Oct 1, 2020 and another 2 cents increase on October 1, 2021.  The tax hikes are expected to raise an estimated $320 million per year that will be invested into road construction and maintenance and $12 million that will be put towards the shipping channel in Mobile.  Currently Alabama is one of the lowest taxed states in the country with the current tax rate of 19 cents per gallon.  With the 10 cents increase, Alabama will remain in the bottom half of the country when considering state tax rates.

Other states are also proposing diesel tax hikes as a part of their state budgets.  The largest proposal waiting to be voted on is Michigan, as the state wants to increase diesel taxes by 45 cents over a year and a half.  If passed, Michigan would be the highest taxed state, passing California, Pennsylvania, and Washington state.  Other states such as OH, MN, WI, AR, and WA are considering raising diesel tax rates as well, although nothing has passed currently.

CSX Rolls Out Truck Reservation System

CSX Transportation is starting to roll out a reservation system that requires carriers and truck operators to book appointments to return empty boxes or drop off loaded containers.  This is another move by CSX in implementing their precision scheduled railroading (PSR) strategy.  Beneficial cargo owners (BCOs) in Memphis and Chicago experience issues with this as they are faced with storage charges while waiting – potentially for days – to get a reservation number.  This effects service as transit times have slowed and boxes sit idle until slots open up.  The reasoning behind this move is to limit the number of boxes idling in their terminals.  By implementing the reservation system, it allows CSX to limit the containers moving into the terminal to match the number of slots available on an outbound train.

In Other News

3/11

Reuters: U.S. presses India to stop buying oil from Venezuela’s Maduro

The United States is pressing India to stop buying oil from Venezuelan President Nicolas Maduro’s government, Washington’s top envoy for Venezuela said, as the Trump administration this week threatened more U.S. sanctions to cut off Maduro’s financial lifelines.

WSJ: Second Wave of U.S. Shale Revolution Is Coming, Says IEA

The U.S. is on track to become a net petroleum exporter by 2021 and will soon after surpass Russia and rival Saudi Arabia, currently the world’s largest oil exporter, the International Energy Agency said Monday.

CCJ: Trucking employment climbs despite paltry jobs report, Class 8 orders continue to cool

Trucking a bright spot amid otherwise lackluster jobs report: The for-hire trucking industry in February added 900 jobs. Trucking’s gains came despite an overall poor showing for jobs numbers in February, with the U.S. economy adding just 20,000 jobs, according to the DOL. However, the country’s unemployment rate fell to 3.8 percent.

EIA: More than 60% of electric generating capacity installed in 2018 was fueled by natural gas

Based on EIA’s December 2018 monthly electric generator inventory of utility-scale generation, 31.3 gigawatts (GW) of generating capacity were added in the United States in 2018 and 18.7 GW of capacity were retired. The 2018 annual capacity additions were the largest since 48.8 GW were added in 2003. Most of the additions happened in the second half of the year, while the retirements occurred mostly in the first half.

WSJ: ‘Extension Cord’ to Carry Green Power from Midwest to East

Two European firms are backing an ambitious $2.5 billion project to carry renewable electricity underground through the American heartland.  Siemens is joining with a Danish investment fund to build and operate a 349-mile-long, electrical-transmission line that would carry wind and solar energy from Iowa into the Chicago area.

Transport Topics: Michigan Gov. Gretchen Whitmer Proposes 45-Cent Fuel Tax Hike

Michigan Gov. Gretchen Whitmer’s budget proposal includes plans for a 45-cent fuel tax increase to provide funding for infrastructure improvements. The proposal, announced March 5, calls for the tax hike in three 15-cent increases from Oct. 1, 2019, to Oct. 1, 2020. (Some tax relief would be offered to lower income families.) The tax increase is meant to generate $2.5 billion a year in revenue, which would be directed to the new Fixing Michigan Roads Fund and devoted to the state’s most important commercial routes.

JOC: Low-Sulfur Fuel Concerns Haunt IMO Rule Rollout

It would take something major to stall the International Maritime Organization (IMO) from implementing the low-sulfur rule, and yet, questions remain about supply, how engines will handle the transition to low-sulfur fuel, and whether President Donald Trump would inject himself into the equation.

WSJ: Top Oil Execs Call for Change as Climate, Technology Concerns Threaten Industry

Some of the world’s top oil executives plan a call to action at a premier industry conference this week, arguing that companies need to actively address climate change and technology concerns that are scaring investors away.

WSJ: Iran Seeks Help from Iraq to Defy U.S. Sanctions

Iranian President Hassan Rouhani is seeking to boost economic links with Iraq on his first official visit to the neighboring country, at a time when the U.S. is upping efforts to curb Tehran’s regional influence.

Bloomberg: Saudi Arabia to Extend Deep Oil Output Cuts into April

Saudi Arabia will supply its clients with significantly less oil than they requested in April, extending deeper-than-agreed production cuts into a second month, a Saudi official familiar with the policy said.

Axios: Trump administration divided over OPEC oil policy

The NOPEC bill, which would allow the U.S. government to sue OPEC members for antitrust violations, is working its way through Congress. The Trump administration is reportedly divided on the issue and so far, has not taken a position. But experts believe that if President Trump supports it, the bill has a high chance of passing.

3/12

CCJ: Another Electric Class 8 OEM Eyes 2019 Debut

Lion, a manufacturer of all-electric school buses and minibuses, on Monday joined the list of players in the ever-crowding electric Class 8 commercial truck field.  Also see, Lion Electric Announces Battery-Electric Class 8.

Supply Chain Dive: Import Drop to Annual Lows with Tariff Hike on Hold

U.S. ports this month are expected to see their lowest import numbers since about a year ago, as trade hits its annual slowdown between peak seasons and the tariff hike is on hold. 1.89 million TEUs came through U.S. ports in January, the latest month numbers are available. This was down 3.7% from the previous month, but up 7.4% year-over-year.

Argus Media: EPA Proposes RIN Market Changes

US refiners and fuel importers must prove compliance with federal fuel blending laws more frequently and in an associated credit market with fewer participants under proposals made today by the Environmental Protection Agency (EPA).

FreightWaves: Trump Budget Plan Boosts Funding for Major Freight Projects

A competitive grant program providing federal money for large, freight-specific projects would receive $2 billion under President Trump’s 2020 budget proposal. That amount would double the $1 billion allocated for 2020 to the program, known as Infrastructure for Rebuilding America (INFRA). In addition, Trump’s proposal removes a $500 million spending limit that had been in place in the program for non-highway projects, including rail, intermodal and port facilities.

3/13

Bloomberg: Venezuela’s Opposition Calls for Return of Foreign Drillers

Venezuela’s opposition leader is rolling out the welcome mat to foreign investors who want a piece of the world’s largest oil reserves. In a major break from the policies of President Nicolas Maduro and his late predecessor Hugo Chavez, Venezuelan opposition chief Juan Guaido wants to allow foreign crude explorers to drill without partnering with the national oil company.

FreightWaves: Oil Major BP Announces New Low-Sulfur Fuel

International oil major BP has announced that it will retail a new very low sulfur fuel oil following successful sea trials, however, it has not released a date when sales will begin. The fuel will have a maximum sulfur content of 0.5 percent and will be sold by BP around the world. BP is one of several refiners, such as Shell and Sinopec, that are offering or are researching low-sulfur fuel.

Argus Media: Scrubber Demand Speeds Up Ahead of IMO 2020

About 3,500 vessels will have marine-exhaust cleaning equipment known as scrubbers by the end of this year as demand is rising ahead of new international regulations, a US-based manufacturer said.  Also see,  Scrubbers Will Keep HSFO in Play for Bunkers

Smart Cities Dive: USDOT launches council to support emerging transportation tech

U.S. Department of Transportation (US DOT) Secretary Elaine Chao announced the creation of the Non-Traditional and Emerging Transportation Technology Council (NETT) during a session at South by Southwest (SXSW) in Austin, TX on Tuesday.  Also see, Smart Electric Power Alliance launches EV research program

American Shipper: Diesel Emissions Reauthorization Bill Introduced

A bipartisan group of 10 Committee on Environment and Public Works senators, including Chairman John Barrasso, R-Wyo., and Ranking Member Tom Carpenter, D-Del., on Tuesday introduced a bill to reauthorize the Diesel Emissions Reduction Act (DERA) through 2024 at its current funding levels.

Utility Dive: New Mexico joins California, Hawaii in approving 100% clean energy mandate

The New Mexico State House on Tuesday passed Senate Bill 489 44-22, requiring the state to generate 100% of its electricity from carbon-free resources by 2045.

WSJ: SoftBank, Other Investors in Talks to Invest $1 Billion in Uber’s Self-Driving Unit

A consortium that includes SoftBank Group is in late-stage talks to invest $1 billion or more in Uber Technologies Inc.’s self-driving vehicle unit, according to people familiar with the negotiations, a move that would help the ride-hailing firm make its pitch to investors ahead of its eagerly anticipated IPO.

3/14

WSJ: Shipping Companies Banking on Gas Carriers as LNG Demand Grows

A raft of U.S. natural gas projects coming online in the next few years are likely to boost the global fleet of seagoing tankers carrying the product by up to a third, as shipping operators jarred by sharp swings in oil markets rush to take advantage of a big new stream of business.

Argus Media: Venezuela’s Oil Re-Opening Unlikely Before 2024

Venezuela’s political opposition is proposing a comprehensive oil reform that would allow foreign investors to own up to 100pc of oil assets from the wellhead to the retail level, but a historic re-opening of the OPEC country´s oil industry is unlikely before 2024-25.

Alabama.com: Gov. Kay Ivey Signs Alabama’s Gas Tax Hike Into Law

Alabama Gov. Kay Ivey signed a bill into law Tuesday afternoon that raises Alabama’s fuel taxes by 10 cents over three years to increase funding for roads and bridges. The Alabama Senate passed the main bill by a vote of 28-6 earlier in the day.

JOC: Pay Hikes Cut US Driver Turnover at Big Truck Fleets

Could higher truck driver pay be working to keep more drivers in truck cabs? That looks to be the case, as the driver turnover rate for large truckload carriers — those with more than $30 million in annual revenue — dropped to 78 percent in the fourth quarter, according to the latest estimate from the American Trucking Associations (ATA). That was a nine percentage point drop from the third quarter.  Also see, Driver turnover rate at larger fleets tumbled in late 2018 and Turnover Rates Down At large Fleets, Up at Small Fleets

JOC: CSX rolling out truck reservation system

CSX Transportation has begun requiring truckers to book appointments to return empty boxes or drop off loaded containers, an operational change that hasn’t been burdensome in smaller markets but is a significant issue in Chicago and Memphis, Tennessee.

3/15

CCJ: ‘Dirty diesel’ bill in California senate would phase out diesel trucks by 2050

A new bill introduced in the California state senate would, if passed, effectively phase out diesel trucks over the next three decades.  The legislation, introduced by California Sen. Nancy Skinner, whose district includes Oakland and Berkeley, would require a 40 percent reduction in greenhouse gas emissions by 2030 and an 80 percent GHG reduction by 2050.

BBC: Brexit: MPs vote by a majority of 211 to seek delay to EU departure

MPs have voted by 413 to 202 – a majority of 211 – for Prime Minister Theresa May to ask the EU for a delay to Brexit.  It means the UK may not now leave on 29 March as previously planned.  Mrs. May says Brexit could be delayed by three months, to 30 June, if MPs back her deal in a vote next week.  If they reject her deal again then she says she will seek a longer extension – but any delay has to be agreed by the 27 other EU member states.

This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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