Cox Automotive chief economist Jeremy Robb on Monday explained how $6 a gallon diesel costs are beginning to impact consumers, matriculating into the car business.

As AAA reported on Wednesday that the average cost of diesel fuel in the U.S. soared to $6.31 per gallon — nearly $3 higher than a year ago — American Recovery Association president Todd Case acknowledged that repossession agents are at their breaking point because of that escalating cost.

“Over the past several months, we have continued to discuss the impact rising fuel costs are having on the collateral recovery industry. Some of our lender and forwarder partners have listened and responded by implementing fuel surcharges, and I want to start by saying that those efforts are appreciated,” Case wrote in an industry message distributed on Wednesday. “However, the situation has continued to escalate, and I believe we have reached a point where we need to have a broader conversation about the actual cost of servicing assignments.

“Crude oil has once again climbed above $100 per barrel. Diesel prices have risen dramatically across the country. Here in the Midwest, we are seeing diesel prices approaching, and in some areas exceeding, $7 per gallon. California has experienced even more extreme pricing, with reports of diesel exceeding $9 per gallon in some areas,” he continued. “And fuel is only part of the equation.

“We are now seeing increased costs and supply concerns involving motor oil and other petroleum-based products. Tires, parts, insurance, wages, equipment, maintenance, technology, training, compliance, property, utilities, and nearly every other expense associated with operating a professional recovery agency have increased substantially over the last decade,” Case went on to say.

“Unfortunately, in many cases, the compensation paid to recovery agencies has not kept pace with those increases,” he added.

The ARA president then presented why repossession agents should be paid for non-contingent mileage

“If an agency is asked to travel 25, 50, 75, or more miles to service an assignment, the expense of making that trip exists regardless of whether the collateral is ultimately recovered. Mileage compensation should recognize that reality,” Case wrote.

“There should be a reasonable basic coverage area included within the standard recovery fee. Once an assignment requires an agency to travel beyond that established area, there should be reasonable non-contingent mileage compensation associated with servicing that assignment,” he continued.

“If the vehicle is recovered, the mileage applies. If the vehicle is not recovered, the mileage still applies. The agency still traveled the miles. The fuel was still burned. The employee was still paid. The equipment was still used. Those costs do not disappear simply because the assignment did not result in a recovery,” he added.

Case wrapped up his industry message by urging all parties involved in vehicle repossessions to share constructive dialogue.

“I am asking our lender partners, forwarder partners, recovery agencies, and industry stakeholders to come together and have this conversation. Fuel surcharges were an important first step, and we sincerely appreciate those who recognized the need and implemented them. But with today’s costs, we need to look beyond temporary solutions,” Case wrote.

“The strength of the collateral recovery industry depends on having professional, properly equipped, properly insured, properly trained, and financially sustainable recovery agencies available to service accounts throughout this country,” he continued. “But it also depends on strong lenders and forwarders who understand the challenges in the field and are willing to work with their recovery partners to find sustainable solutions.

“We need each other. This job cannot be done without each other. So, let’s work together to find solutions that allow every part of this industry to remain strong,” Case went on to say.