Energy/transportation & logistics: California said to be at critical stage in fuel rates

By Patrick Burnson – Executive Editor | August 12, 2009
Logistics Management

SAN FRANCISCO—Leading California economists and major employers released a new study analyzing the state’s crippling fuel costs and its impact on logistics management.

According to the comprehensive report done in behalf of “Fueling California,” a new nonprofit consumer alliance comprising some of the nation’s largest transportation and logistics providers, the issue has a direct bearing on “job flight.”

“And not only in the transportation sector,” said Dr. Wallace Walrod, president of the Orange County Business Council. “Although that is certainly a major concern. The fact is, California is losing jobs in to other states because it is simply too expensive to move goods here.”

Walrod added that California’s searports are attracting fewer direct inbound vessel calls because of escalating fuel prices for drayage vehicles as well.

The primary purpose of this report is to examine the crucial relationship between California fuel policies and the related costs and economic impacts borne by California consumers, both households and businesses. According to alliance spokesmen, this analysis will determine “what makes California different” than other states in terms of fuel standards and policies.

“Out of this understanding, new policy initiatives can be developed which can help alleviate future “fuel spikes” caused by California’s differences from other state and national policies,” said the report.

At yesterday’s press conference, Robert M. Sturtz, a spokesman for United Airlines, said air cargo shippers are less likely to use California airports due to the higher cost of jet fuel.

“The fact that the state has to import fuel rather than use its own, tells the whole story,” he said.

Spokesmen added that although price levels rise and fall over time, Energy Information Administration (EIA) (U.S. Department of Energy) data indicate that average retail gasoline prices are routinely much higher in California.

Fueling California board members include United Airlines, Union Pacific Railroad, UPS, Avis Budget Group, Con-way Inc., Harris Ranch, Ambassador’s International, Inc., and Chevron. The combined companies employ 365,942 California residents and contribute more than $2.1 billion annually in tax revenues to the state.