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Roemer Report – February 2009

Slow Oil Prices Only Temporary: Don’t get used to these low fuel prices, say analysts. They won’t last. Oil is trading at about $50 a barrel now, but that low price is setting the stage for another price spike. The oil industry has reduced production and oil and gas exploration because those projects don’t make economic sense when energy prices are low. But when the global economy rebounds, it will require more fuel. And higher demand combined with lower supply is a recipe for high prices. Some analysts say oil prices could surpass $150 a barrel, possibly even reaching $200, eclipsing last summer’s record prices at the pump. “I think those supply limits will come back to bite with a vengeance,” said Sean Brodrick, a natural resources analyst. Big oil companies are canceling and postponing oil and gas projects, which may cause a drop of 7 percent or more in global oil production this year, according to Brodrick. And OPEC is embarking on its biggest single production cut ever. “Demand will start growing, supply will start coming down, and you’ll have that intersect again where prices will take off dramatically,” said Bruce Vincent, president of an independent oil producer. Although no one knows for sure, some analysts predict prices could spike as soon as next year, or maybe in 2011 or 2012. Another researcher contends that part of the problem is that the big oil companies didn’t invest enough in new oil exploration over the last few years, despite earning billions of dollars in profits.

Schneider One Step Ahead: The federal government is planning to issue a rule this year that would mandate electronic onboard recorders for certain trucking operators. Companies exceeding the hours rule at least 10 percent of the time and those with serious fatigue-related accidents are expected to be among the first to be required to install the “black boxes.” Many analysts believe the rule could eventually lead to a universal mandate. But Schneider National isn’t waiting for any mandate. The country’s second-largest truckload carrier recently announced its decision to install the electronic onboard recorders on its fleet of 15,000 trucks. Schneider, which has a very good safety record, plans to have its entire fleet equipped by the end of 2010. “We’re going to do it because I don’t think there’s any question this is the right thing to do,” said Schneider’s vice president for safety and driver training. Don Osterberg said, “It’s an opportunity to provide leadership without a mandate. I think a mandate will come. We don’t wait to be told the right thing to do.” The benefits extend far beyond safety, according to Osterberg. One benefit will be the ability to accurately predict drivers’ current hours of service status and how much legal driving time they are allowed. The black boxes will also help in:

1. Building loads and enabling carriers to respond more accurately to shippers’ changing needs
2. Obtaining real-time visibility so that companies know when a load is dispatched and where a driver is, making for more accurate projections of arrival times
3. Modernizing the trucking industry by eliminating logbooks

Bigger Trucks on the Horizon? In 1974 Congress enacted the national weight limit of 80,000 pounds for trucks, and those limits were frozen in 1991. But some industries are suggesting that now is the time to increase those limits to 97,000 pounds. Shippers of forest products, for example, have been hit hard by the economy. They say that raising the weight limits of trucks would reduce the cost of moving wood between 9 and 18 percent. Forest product shippers and others who ship heavy goods are making a new effort to lift the weight limits, and they hope the 2009 highway bill or other legislation will allow such hikes. Advocates say the poor economy as well as environmental reasons justify a renewed look at the issue. They suggest that allowing heavier trucks would result in fewer trucks on the road and less fuel to transport the same volume of products, thereby reducing emissions. “This is going to benefit everyone,” said the director of Americans for Safe and Efficient Transportation. “We see this as a way to help the trucking industry, while also helping the shippers.” Last year’s attempts to raise the weight limit died quickly, and efforts this year face long odds, according
to Traffic World.

Rules Target Unfit Drivers: Serious illness has been a critical factor in thousands of truck and bus accidents. Consider the 1999 accident in New Orleans, when a driver suffered a heart attack while driving a busload of senior citizens on a gambling tour. Twenty-three passengers died and at least 19 suffered serious injuries. The driver, it turns out, had been hospitalized 10 times in the 20 months before the accident for heart and kidney disease, yet doctors never reported his health problems to state or federal officials, and the driver was repeatedly cleared to renew his CDL. Many health care providers know CDL holders with serious medical conditions but never report the illnesses to motor vehicle licensing authorities, according to the NTSB. That is likely to change soon, however. The Federal Motor Carrier Safety Administration (FMCSA) recently approved a new rule that requires states to merge commercial truck and bus drivers’ licenses with drivers’ medical examination certificates into a single electronic record. Linking the two records will make it easier to determine whether drivers meet medical requirements to operate commercial vehicles. “These actions will support and strengthen our continuing commitment to ensure that only medically qualified individuals are allowed to operate an interstate truck or bus. Safety is our paramount responsibility,” said the head of the FMCSA. Last year, a study by the Government Accountability Office found that hundreds of thousands of drivers operate trucks and buses despite qualifying for federal medical disability payments. The study also found that forgery of medical certificates was not uncommon.

Snow and Ice Advisory: Snow and ice aren’t just a problem on roadways; they’re also a menace when they accumulate on top of vehicles. Snow and ice falling from traveling trucks can be hazardous to nearby vehicles, risking the safety of vehicle occupants and damaging vehicles. What’s more, drivers who try to manually remove the snow and ice accumulations from the tops of trailers may find themselves on a slippery and dangerous surface. In the first comprehensive study to address snow and ice accumulation on vehicles, the American Transportation Research Institute (ATRI) offers some recommendations:

1. Short-term actions should include educating the public and all drivers about the hazards of snow and ice accumulation on vehicles. American Trucking Associations president and CEO Bill Graves issued a “call to action” for the association to work with the American Automobile Association, the Commercial Vehicle Safety Alliance, and other industry partners in this effort.
2. The ATRI report recommends assessing various snow-removal devices to determine which ones are most efficient and cost effective. Likewise, the group urges a study of the feasibility of locating snow-removal devices at weigh stations and ports of entry.
3. Ideally, vehicles will eventually be manufactured with a built-in means of removing or preventing the buildup of snow and ice. ATRI recommends studying this long-term plan.

Older Drivers have Lower Crash Rates: Past research predicted that older drivers would cause an increasingly larger proportion of fatal car crashes. However, a new study finds that prediction was off the mark. Despite growing numbers of older folks on the road, fewer died in crashes and fewer were involved in fatal collisions from 1997 to 2006 than in past years. Crash deaths among drivers 70 and older fell 21 percent during those years, reversing an upward trend, even as the population of people 70 and older rose 10 percent, according to the study by the Insurance Institute for Highway Safety. Fatal crash rates fell among older drivers for most types of crashes, and the decline was dramatic for crashes at intersections. This finding is especially significant since several studies have found that older drivers tend to have especially high accident rates at intersections. Researchers are stumped about why seniors are having fewer car accidents, but they speculate that it’s due to safer vehicles, older people being more fit than in years past, and better access to health care. Older drivers are mostly a danger to themselves and their passengers, not to other motorists. Seventy-five percent of people who die in crashes involving older drivers are the drivers themselves or their older passengers.

DOs and DON’Ts OF MAKING MISTAKES: In order to learn from your mistakes, you can’t be swallowed up by guilt or regret. Realize that mistakes are an essential part of life and put your best foot forward. These steps can help:

1. Do apologize. If your mistake has affected other people, offer a dignified apology. State simply that you are sorry—it was an unfortunate incident that won’t
   happen again.
2. Don’t be a perfectionist. People who are afraid to make mistakes spend their lives doing nothing. Avoiding mistakes becomes a psychological barrier to taking risks.
3. Don’t try to justify mistakes. It’s natural to try to justify your actions—“Yes, my dog bit the postman, but my wife didn’t have him on a leash.” Sometimes it’s best to simply say, “I made a mistake.”
4. Do understand why the mistake occurred. Maybe you said unkind words in anger. Why were you angry in the first place? Get to the bottom of the problem and determine what you need to do so the problem is not repeated.
5. Do view mistakes as essential to success. See mistakes not as failures but as stepping stones to the place you want to go.

The best way to predict the future is to invent it.
—Alan Kay