Record-Setting Diesel Prices Put Pressure On Bay Area Businesses and Consumers

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Alexis Madrigal (0:41)

Welcome to Forum. I'm Alexis Madrigal.

You probably don't think about trucks that often, but it is trucks. Long-haul semis, delivery vehicles, dredge trucks in and out of the port that power so much of our local economy. These vehicles run on diesel. That means that $8 a gallon diesel hit so many businesses hard. But of course, it's not just the trucks. Diesel is everywhere in our economy. Here to tell us about it, we've got Severin Borenstein, professor at UC Berkeley's Haas School of Business and a faculty director of the Energy Institute at Haas, and a member of the Board of Governors of the California Independent System Operator.

Kyle Cameron (1:18)

Welcome.

Severin Borenstein (1:19)

Thanks for having me on.

Alexis Madrigal (1:21)

We've also got Kyle Cameron, president of Cameron and Co. Trucking, Inc. Welcome, Kyle.

Kyle Cameron (1:27)

Thank you, sir. Thanks for having me.

Alexis Madrigal (1:29)

So Kyle, you run two businesses that are being hit hard by the cost of diesel. Let's start with the obvious one, trucking. How much has that business changed for you because of the diesel price spike?

Kyle Cameron (1:43)

Well, our overall cost, just our largest cost is diesel, aside from payroll labor. And so since we've had over, the fuels doubled since last year. I was paying $4.85 to $4.90 a gallon, and now we're knocking at the door at $8.50. And I'm sometimes fortunate to get a little bit of a discount on the rate because we burn about 10 to 12,000 gallons of fuel a month.

And so I believe last on Friday, I filled up, and they email me when I get the, when I swipe the card at the card lock, and I paid $8.41 for my pickup. Wow. Yeah.

Alexis Madrigal (2:29)

Wow. I mean, who are your customers? Like what does this business that's so dependent on diesel, like who does it end up serving?

Kyle Cameron (2:41)

So our trucking company is pretty much a local trucking company, and we service the construction industry, and the agricultural industry, specifically the wine industry. So on the construction side, we haul dirt, sand and gravel, pre-mixed concrete. So we service new construction predominantly, or remodel, but mainly new construction.

Alexis Madrigal (3:05)

So that'd be like, yeah. You're just bringing anything you need to build a house. Right.

Kyle Cameron (3:11)

Exactly.

Alexis Madrigal (3:11)

Yeah.

Kyle Cameron (3:12)

You bought a lot, you're building a new home. So we're doing all the export. So we're hauling the dirt off, and then importing all the septic system, if you're not in city limit, and digging the footings, and bringing in the drain rock, and building the pad. So everything that comes in before the framers come to start framing your house, comes on a truck from us usually.

Alexis Madrigal (3:36)

Yeah. Let's talk about the other business you've got, making wine. I mean, people might not associate that as much with diesel, but there's a bunch of steps along the way, right, that require the food.

Kyle Cameron (3:49)

Oh, certainly. So yeah, I mean, we grow grapes. I'm a seventh generation wine grape grower in Sonoma County. And actually, as we're talking, I'm in my pickup, sitting in one of our Chardonnay vineyards in the Russian River Valley. We started this morning at 2 a.m. with diesel tractors getting the grapes out of the field.

So that would be the first time diesel affects our industry in wine grape growing and making wine. So we have diesel tractors work in the fields. Then we have a diesel truck on its way right now to pick up these grapes that we picked this morning early. And then that gets shipped to the winery and then it's processed. And so once it's processed into finished wine, then it hits a truck again and a tanker. So that'd be the third time it's moved with a diesel truck. Tanker takes it to the bottling warehouse where we bottle the wine.

And so tanker hauls it over there. We make a finished product and palletize it. And then it has to leave the bottling facility to our warehouse facility where we store it. So there's another move. So that's number four in a box truck, which is diesel. And then now that it's in the warehouse, we have to sell our wine to Molly Stone or Oliver's Market or Safeway or a smaller mom and pop shop that is definitely affected. So that's the fifth time. So we have to haul it to the store, which is in the diesel truck.