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ATA Letter Regarding the Cap and Trade Bill

June 25, 2009

The Honorable Henry A. Waxman

House of Representatives

Washington, DC 20515

Dear Chairman Waxman,

On behalf of the American Trucking Associations (ATA) I am writing to express our concerns with H.R. 2454, the American Clean Energy and Security Act of 2009. ATA strongly supports efforts to reduce greenhouse gas (GHG) emissions and make this country more energy independent. Yet H.R. 2454, for our industry, presents more challenges than answers. We want our industry to be as green as possible, utilizing the newest technologies and fuels when they are available to us.  In its current form, the legislation does not adequately address a number of issues critical to the trucking industry and conversely will add considerable cost and complications to the movement of goods in this country.

With more than 600,000 interstate motor carriers in the U.S., the trucking industry is the driving force behind the nation’s economy. Trucks haul nearly every consumer good – food, clothing, appliances – at some point in the supply chain. Few Americans realize that trucks deliver nearly 70 percent of all freight tonnage or that 80 percent of the nation’s communities receive their goods exclusively by truck. Even fewer are aware of the significant employment, personal income and tax revenue generated by the motor carrier industry.

While we have an overriding concern that mobile sources, including trucks, should be addressed differently than traditional stationary sources under any carbon reduction regulatory program, I would like to highlight four specific concerns with H.R. 2454.

First, we believe that H.R. 2454 will significantly increase the price of fuel we consume. Numerous experts have indicated that the bill will dramatically increase the price of transportation fuels. One major petroleum supplier to the trucking industry has advised that H.R. 2454 could result in a cost impact of as much as 77 cents per gallon for gasoline and 88 cents for diesel fuel. In 2008 trucking consumed over 39 billion gallons of diesel fuel. This means that a one-cent increase in the average price of diesel costs the trucking industry an additional $390 million in fuel expenses. For an industry in which the cost of fuel you purchase today to make freight deliveries may not be recouped for 30, 60 or even 90 days, such fuel cost increases will have a devastating impact on all companies, but most especially on small trucking firms. With the downturn in the

economy and soft demand for freight transportation services, trucking companies are struggling to survive. Any substantial fuel cost increases imposed directly or indirectly on the industry will negatively impact the delivery of vital consumer goods throughout the nation.

Second, our nation faces an infrastructure crisis. The National Surface Transportation Policy and Revenue Study Commission reported to Congress that we need to invest at least $225 billion annually to build and maintain a world-class infrastructure that can safely move both people and goods. According to the most recent report from the Texas Transportation Institute, drivers in metropolitan areas wasted 4.2 billion hours sitting in traffic, burning 2l.9 billion gallons of fuel. Thus, one of the most effective ways to reduce fuel consumption is to make the nation’s highway system more efficient. Yet, none of the carbon auction revenues generated under H.R. 2454 would go toward highway infrastructure improvements that could reduce congestion and thus reduce greenhouse gas emissions.

The Highway Trust Fund – which funds our highway and transit programs – is funded in large measure through the federal tax on gasoline and diesel. ATA has publicly stated its willingness to support an increase in those taxes provided the proceeds address congestion and system capacity. However, by significantly raising the cost of fuel, H.R. 2454 will have the added consequence of jeopardizing the ability of the trucking industry to absorb additional fuel tax increases for these much needed infrastructure improvements.

Third, ATA has been a vocal advocate for greater government oversight of petroleum markets in order to put a stop to excessive speculation in these markets. The surge in fuel prices last summer due to what we believe was excessive speculation taught our industry a valuable lesson about the consequences of lax government oversight of this valuable commodity. While we applaud the efforts to address this issue in H.R. 2454, we believe that trading reform should be passed, implemented and enforced prior to the creation of new carbon commodity markets.

Finally, Congress needs to be mindful that heavy duty trucks are far different from passenger cars. Truck fuel economy continues to remain flat. Truck transportation is not a discretionary activity – it is undertaken for the sole purpose of moving freight for our customers. We are dependent upon the use of diesel as our fuel of necessity and choice. Natural gas may be used in certain segments of the trucking industry, but is an inadequate substitute for diesel fuel for over-the-road tractor semi-trailers. Similarly, biodiesel may be used in low percentage blends, but cannot replace the industry’s dependence upon petroleum-based diesel fuel. The intent behind H.R. 2454 may indeed be to raise the price of petroleum-based fuels as a means to encourage consumers to pursue less energy intensive means of transportation. However, those of us in the business of moving the nation’s freight have few, if any, of the technology options available as alternatives. And H.R. 2454 does not provide for the incentives to develop new technologies or alternative fuels for this vital industry.

Accordingly, after careful review of H.R. 2454, we have concluded that our industry cannot support this bill in its present form. I would hope that as climate change legislation moves forward we can work together on solutions that consider the financial health of our transportation system, the viability of our economy and our nation’s environment.

Sincerely,

Bill Graves

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