No Passing the Bucks to Consumers: CEI Letter to Hastert on Fuel Surcharges

                                                            September 21, 2000

The Honorable J. Dennis Hastert

United States House of Representatives

2263 Rayburn House Office Building

Washington, DC 20515-1314

Dear Mr. Speaker:

            This is to express our concern about H.R. 4441, the Motor Carrier Fuel Cost Equity Act.  This bill was reported to the full House by the Transportation and Infrastructure Committee in July, and could be voted on soon.

This bill would mandate that motor carriers pass on the cost of higher fuel prices to their customers in the form of a surcharge.  This surcharge would be triggered whenever the price of fuel exceeds 52-week average fuel cost by five cents per gallon or more.

We believe this is a misguided and dangerous approach to the problem of increasing fuel prices.  For the first time in nearly twenty years, the federal government will once again be in the business of determining the prices charged in the trucking marketplace.

And, because the bill prohibits reductions in other charges to compensate for the surcharge, every element of a shipping bill will become subject to review in the courts to determine whether it charges customers enough.  The ultimate loser in this game would be the American consumer, who will ultimately pay the higher prices mandated by this legislation.  At a time when consumers are being socked at the gas pump, and in their home heating bills for higher energy costs, the last thing they need is for Congress to require that they pay more for goods they buy as well.

Of course, when fuel costs rise, shipping costs may have to rise as well.  But providers and customers in the marketplace, under the normal forces of supply and demand, should determine the nature of any increase.  Since this system has worked well since deregulation in 1980, saving consumers almost $20 billion per year.  We should not short-circuit this process through edicts from Washington, D.C.

This is not to say Congress can do nothing to provide ease the burden of high fuel costs on truckers and consumers.  It should look to its own contribution to costs – and reduce federal fuel taxes.  Moreover, it should look at restrictions on oil exploration and drilling, which reduce fuel supplies.   Such approaches would be far more sensible than the “make consumers pay” approach of H.R. 4441.

Sincerely,

James L. Gattuso

Vice President

Policy and Management

CC: Members of the United States House of Representatives