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    Home » Blog » Is rail causing fuel to be high?
    News Supply Chain

    Is rail causing fuel to be high?

    Pilot CEO testifies to Surface Transportation Board about strong- arming by Union Pacific
    RoosterBy RoosterMay 23, 2022No Comments3 Mins Read
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    Pilot tanker in front of Flying J truck stop
    Now who would want fuel prices to stay high, let see what I can find out - Image: Jim Allen | FreightWaves
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    Back on April 26 and 27, the Surface Transportation Board (STB) had a hearing on “Urgent Issues in Freight Rail Services” and  what some would consider an arm-twist was put into the official record. 

    Pilot CEO Shameek Konar, the fourth person to hold the position, made a statement that is making rounds at the truck driver level. And I quote, “We were required by the Union Pacific to reduce shipments by 26%.” Yeah, you heard correctly, it’s at the 02:45 mark of the transcript.

    Here’s the whole testimony, but Shameek Konar is first up to the plate – Surface Transportation Board on YouTube

    One of the “Big 3” in truck stops (Pilot/Flying J, TA/Petro, and Love’s), was told to cut back shipments? And what’s worse, the company was told to cut shipments back even more to 50%. 

    It’s not just diesel fuel that’s affected. Diesel exhaust fluid (DEF) is also hauled by rail (about 21,500 gallons per carload). You can do the math on how much money each could be worth. Pilot sells about one-third of the DEF and over 20% of the diesel fuel for over-the-road trucks. 

    Now who would want fuel prices to stay high?

    When someone tells a major player to cut a portion of their supply chain back by this amount, it can cause spot shortages like we saw in Arizona last November. A single railcar holds enough DEF for over 3,000 trucks, using Pilot’s testimony of an average refill of 7 gallons. That’s about five million road miles affected, just from one carload. All truck motors built post-2010 must have a DEF system installed. And let me tell you, running out of DEF is far worse than running out of diesel. 

    It’s not like Union Pacific can stop Warren Buffet, he has his own railroad. – Image: Jim Allen | Freightwaves

    So what did Pilot do when it was told to cut rail shipments on Union Pacific’s system? Well, when the guy who holds about one-third of your stock also owns a railroad, it’s not too hard to figure that out. Warren Buffett, the “Oracle of Omaha” himself, has a 38.6% stake in Pilot Company, with plans to buy more in 2023. He also owns Burlington North Santa Fe Railroad (BNSF) which he bought in February 2010. So making a call to haul more of the fuel you own in-house could be seen as a no-brainer. 

    So why did Union Pacific start this little tirade? Who knows? I do own one share of Reynolds Consumer Products , but I prefer not to use Reynolds Wrap any more making tinfoil hats. Some say that the investors who hold big chunks of Union Pacific stock want to push their electric vehicle programs. You can look into this yourself.  My days of fighting “super-villains” are behind me. 


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    Rooster
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    Rooster is a 15 year trucking veteran, farm boy, writer, and adventurer. I bring a mix of absolute chaos and down to Earth reasoning to the table. Known to be a little eccentric and have a dire need to get his point across. Beware of flying "Giga-Chugs" and lab coats!!!

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