38
www.WesternFarmerStockman.com March 2008
Livestock
Find out how much
truck costs per mile
COMMENTARY
By RON TORRELL, WILLIE RIGGS
and DUANE GRIFFITH
IVEN record-high new vehicle purchase prices, fuel costs at $3.50 per
gallon, and the limited maintenance
and repairs that can be performed at the
ranch on newer model vehicles, how
much does it cost per mile to operate
your 1-ton diesel ranch truck?
We modified a Texas A&M Excel
software program to generate an automobile spreadsheet calculator that
determines cost per mile of operation.
We used actual costs of operating our
personal 1-ton diesel truck vehicles
(see table). Assuming your costs of operation are similar, the cost per mile will
approach 65 cents.
As miles driven per year increase,
cost of operation per mile declines dramatically. This is easily explained by
economy of size. Fixed costs such as insurance, license, taxes, interest and depreciation are spread over more miles.
Fuel economy also impacts the cost
of operation per mile driven. Cost of fuel
did impact the bottom line, but not as
significantly as miles driven per year.
Vehicles in this example were purchased used. We ran a scenario using our
new dream vehicle bought for $40,000.
All other input variables were the same,
recognizing many input costs, fixed and
variable, would change. Cost of operation per mile driven rose from 63 cents
per mile to an amazing 87 cents.
We then explored leaving the 1-ton
diesel idle until needed for big jobs such
G
Key Points
■ Cost of running your pickup truck can be
estimated with the auto calculator.
■ With climbing fuel costs, knowing pickup
costs are important.
■ Estimates are based on using a 1-ton
diesel truck.
as pulling trailers and heavy loads. We
reduced miles driven from 20,000 per
year to 5,000 on the big vehicle and purchased a small, used economy pickup
for day to day use. We drove the smaller
vehicle 15,000 miles per year.
$1.77 a mile!
Cost per mile driven on the 1-ton rose to
an amazing $1.77. Cost per mile driven
on the smaller vehicle was 34 cents.
Total cost of maintaining both vehicles
amounted to $13,950 per year. Total
cost maintaining the 1-ton vehicle only
and running it 20,000 miles amounted to
$12,685 per year. This favors maintaining
the larger vehicle solely by $1,265 per
year. This is primarily due to the additional fixed costs that are incurred by
maintaining two vehicles yet traveling
the same number of miles per year.
For a free copy of the automobile
calculator, contact Ron Torell at 775738-1721 or torellr@unce.unr.edu; Willie
Riggs at 541-883-7131 or willie.riggs@
oregonstate.edu; or Duane Griffith at 406994-2580 or griffith@montana.edu.
Torell is a University of Nevada
Extension livestock specialist; Riggs is director of the Klamath Basin Research &
Extension Center in Klamath Falls, Ore;
and Griffith is a Montana State University
Extension farm management specialist.
Costs associated with operating a 1-ton used diesel truck
Current value
Total miles used (useful life)
Current mileage
Salvage value (trade or junk)
Annual miles of use
Fuel use (miles per gallon)
Cost of fuel
Interest rate on capital
Monthly loan payments (if made)
Annual license and tax
Annual insurance
Tire cost (per set)
Tire life in miles
Annual repair, maintenance cost
Units
$
Mile
Mile
$
Mile
Gal.
$/Gal.
%
$
$
$
$
Mile
$
Vehicle/pickup values
$20,000
250,000
135,000
$2,500
20,000
15.0
$3.50
7.00
$0
$100
$615
$700
30,000
$2,500
Cost components
Operating or variable cost
Fuel
Tires
Repair and maintenance
Total operating or variable cost/mile
Total annual operating or variable
$/Mile
$/Mile
$/Mile
$/Mile
$
$0.233
$0.023
$0.125
$0.38
$7,633
Fixed costs
License and tax
Insurance
Interest (non-cash)
Depreciation
Total fixed cost ($/mile)
Total annual fixed cost
$/Mile
$/Mile
$/Mile
$/Mile
$/Mile
$
$0.005
$0.031
$0.065
$0.152
$0.25
$5,052
$/Mile
$
$/Mile*
$
$0.63
$12,685.3
$0.42
$8,348
Total cost per mile (operating + fixed)
Total annual cost (operating + fixed)
Total cash costs per mile*
Total cash costs*
*Assumes driver and additional labor is a cash cost.