Diesel prices are surging across the country, with new modelling tabled in NSW Parliament today warning that prices could peak at $8.00 a litre unless the federal and state governments take urgent action. Now, Wood Central can reveal that one of the state’s largest harvest and haulage forest businesses, responsible for employing more than ten per cent of Bulahdelah’s population, has resorted to selling cattle off the farm to pay for the fuel needed to transport timber to mills.
Speaking to Wood Central tonight, Anthony Dorney — the fourth of five generations of the Dorney family to run timber trucks out of the NSW hinterland — said the business is being pushed to breaking point, as fuel spiked to $3.51 a litre on Macleay Island and $3.39 a litre in Armidale — more than a dollar above what it cost to fill a truck before the conflict began in the Gulf.
A monthly fuel spend that once ran between $200,000 and $220,000 before February 28 has now blown out to $400,000, with Dorney warning it could reach $500,000 if prices keep climbing and no government relief is forthcoming. It is a figure so large that the family cannot turn over enough revenue to service it.
“Our fuel bill, average, is about $200,000, $220,000 a month. And now it’s over doubled. It just gets bigger and bigger and bigger,” he said. “So to try and find some extra money to pay for that when we can’t recover that — all our customers can’t accept the fuel levy, and we’re struggling to recoup some of that money. And on top of having very high workers’ comp this year. And other very high insurance, power, and all that. There’s no spare money to be able to pay this.”
This week, the Dorney family spoke to the Daily Telegraph, The Australian and A Current Affair about the crisis, with the family now forced to liquidate assets, including spare equipment and cattle, to stay above water. “We have to sell cattle. That’s what we do to try and find money to keep being able to pay our fuel bill,” he said.
One of the state’s largest harvest and haulage operators, Dorney runs 25 trucks across routes to Sydney, the Central Coast, Canberra and Brisbane — the engine room of Bulahdelah’s economy. With each truck burning between $1,500 and $2,000 of extra fuel every single day, keeping 25 prime movers on the road has become, in Dorney’s own words, impossible.
“Someone told me, you’ve got to turn over an extra $500,000 a week to gain that extra $50,000 profit to be able to pay it. And that’s impossible,” he said.
It comes as Wood Central reported last week that truckers are now absorbing an additional 43 cents per kilometre in fuel-related costs, with quarterly contract structures locking operators into rates set long before prices surged. That structural lag is proving just as damaging as the price itself.
Harvest and haulage agreements are reviewed on a quarterly cycle, meaning the full weight of February’s price shock will not flow through to contract adjustments for months. And whilst the NSW state-owned Forestry Corporation has told the Dorneys it will move to monthly fuel levy reviews, for a business now paying $400,000 a month in fuel costs alone, that shift cannot come quickly enough.
“The trucks, you just can’t wait that long for your money,” Dorney said.
And mills are already responding: some have stopped accepting timber from private landholders altogether; others have raised prices; and those locked into contracts without fuel levy provisions are left with no room to move at all.
“It’s already started. There are mills not taking timber. And not only that, mills have put up their prices. I’ve spoken to other mills — how they’re struggling. And we’re the same,” Dorney said. “Some people said, we just can’t take the timber. Because some people have got contracts where they haven’t got a fuel levy built into their pricing.”
Whilst availability of diesel is no longer the primary concern, the cost — and the credit lines required to sustain it — have become an emergency in their own right. A fuel distributor who previously moved a million dollars’ worth of diesel through Newcastle each day has seen that figure double overnight, now requiring twice the credit to maintain supply to the same customers.
Those customers, like the Dorneys, must find a way to service that credit before the fuel is even burned. “A lot of people said, oh, we just need fuel — get it — and they’ve got it. And then they realise it’s that expensive. How are they going to pay for it?” he said. “Because the problem with fuel is it’s already gone and burnt. You can’t get it back.”
An early wrinkle caught operators off guard in the first week of the conflict, with bulk diesel — historically the cheaper option — jumping to sixty cents a litre above retail bowser prices.
That was a consequence of spot-market pricing that upended the cost structures operators had relied on for years, though that gap has since narrowed considerably. “What we can buy our bulk fuel for is a lot closer to what the Bowsers are,” Dorney said.
Yesterday, Wood Central also spoke to Steve Dobbyns, Executive Officer of Forest and Wood Communities Australia, who said the federal government is effectively double-dipping on the crisis. Collecting a percentage-based excise on top of GST as prices climb, the government is reaping more revenue from the same tank of diesel with every dollar prices rise.
“If they don’t reduce the excise — effectively the tax they’re taking off fuel — they’re double dipping. They take a fuel excise plus they take GST off the top,” Dobbyns said. “We’re supposedly in a housing crisis, and you’re passing on the cost of building materials via the diesel.”
With the country also in the grip of a cost-of-living crisis, Dobbyns argued the government had two separate mandates to act on fuel taxation — and was failing on both. The remedy he is calling for is a freeze — locking the per-litre excise at February 28 levels, so that as prices climb, the government’s take does not. “If they were taking, say, 55 cents — and the price of fuel keeps going up — fix it at 55 cents,” he said.
Meanwhile, Maree McCaskill, CEO of Timber NSW, said the hardwood supply chain is doing what it can to hold costs in check — but fuel is not a variable the industry controls, and the consequences are already flowing downstream. “As Master Builders said today, the fuel crisis will have a flow-on effect to the cost of housing and the other parts of the building and construction value chain over the coming months,” McCaskill said.
And whilst the cost shock is set to hit the broader building supply chain in the coming months, the Dorney family is the canary in the coal mine. Anthony Dorney is the fourth of five generations of his family to haul timber out of Bulahdelah — and through drought, fire and pandemic, the trucks kept moving. But at $3.51 a litre nationally, with NSW Parliament now modelling an $8.00 peak, the question facing the fifth generation is not whether to sell cattle. It is what comes after the cattle are gone.
