NC says it might have to cut ferry service because of high diesel prices
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- NCDOT requests an extra $3 million to cover higher ferry diesel costs for coming year.
- Diesel costs rose about 75% since the U.S./Israeli war with Iran began in February.
- Without extra funds the ferry schedule could be cut by 43% to break even on fuel.
North Carolina’s ferry system may need to cut back service during the busy summer months if it does not get help paying its unusually high fuel bills, state officials say.
The cost of the diesel fuel the state uses in its ferry fleet is up 75% on average since the start of the U.S./Israeli war with Iran in February. World oil prices spiked and have remained high after the conflict closed the Strait of Hormuz, the passage in and out of the Persian Gulf through which 20% of the world’s oil supply moves by ship.
The N.C. Department of Transportation will be able to cover the added cost to run its ferries through June, the end of the state’s fiscal year, according to Jonathan Mauldin, a business analyst for the department.
But NCDOT is asking lawmakers for an extra $3 million to keep the ferries running at their full schedule for the year starting July 1. The department’s 21 ferries carry residents and visitors over seven routes across the Currituck and Pamlico sounds and the Cape Fear, Neuse and Pamlico rivers.
Without help with its fuel bill, the state will need to run boats less often just as the ferries are busiest with tourists and seasonal residents, said Jed Dixon, director of NCDOT’s Ferry Division.
“It’s extremely important for all of our users,” Dixon said. “Ocracoke depends on ferry, and if we don’t have our full schedule, especially in their peak season, it has real impacts for them.”
The state can’t easily recoup the higher fuel costs by charging users because most rides are free. NCDOT collects tolls on only three of the seven car ferry routes, across the Cape Fear River and over Pamlico Sound between Ocracoke and both Swan Quarter and Cedar Island.
NCDOT seeks help from state budget writers
The state’s ferries use an off-road diesel fuel that is not subject to highway taxes. While the average pump price for diesel in North Carolina on May 25 was about $5.30 a gallon, according to AAA, the state was paying about $4.15 a gallon to fill its boats, Mauldin said.
But that’s up from less than $2.50 a gallon this winter, he said.
The state saw a similar spike in diesel prices when Russia invaded Ukraine in 2022, driving up world oil prices. Diesel remained high through that year, Mauldin said, but had returned nearly to pre-war levels by the summer of 2023.
This time, diesel prices will likely remain high for longer, through 2027, said NCDOT Deputy Secretary Julie White. She cites U.S. Energy Information Administration forecasts that say some Middle East oil production will likely remain disrupted through the end of this year.
As members of the General Assembly continue to craft a state budget, White said NCDOT has made its case for help.
“We’re in conversations with them about this,” she said Wednesday. “Our hope is that they appropriate money to help with the fuel budget.”
NCDOT expects its ferries to use nearly 2.2 million gallons of diesel in the year starting July 1, if they run a full schedule. At $4.15 a gallon, the ferry system would spend $9.1 million on fuel, or $3 million more than its fuel budget for the year.
Without help, the ferry system says it would need to cut its schedule by 43% to break even on fuel.
