Anticipating and Managing Fluctuating Fuel Costs
Fuel is one of the most significant expenses when it comes to running a fleet of vehicles, and even a modest increase in the price of fuel can put a financial strain on a business. When fuel costs surge to record highs as they have done in recent years, it’s not just domestic users who feel the impact. Companies both big and small that power the economy and keep things moving are also massively affected. It is now more critical than ever for fleet managers to have a comprehensive understanding of fuel prices, how and why they fluctuate, and how to stay efficient when prices rise.
What Impacts the Price of Fuel?
The first step to anticipating when fuel prices are going to rise steeply is understanding why fuel prices change and the external factors that have an impact. The cost of diesel and petrol at a commercial pump is dictated by wholesale fuel prices, which are affected by many things. Whether your fleet uses fuel cards or on-site fuel storage, the following factors will influence the price:
- The global price of crude oil
- Supply and demand for crude oil
- Exchange rates (dollar to the pound)
- Distribution costs
- The margin the company you’re buying the fuel from decides to take
- Fuel duty and VAT
- International conflicts and politics
Some of these factors remain relatively static, like fuel duty and VAT. Others, like the global price of oil and dollar to the sterling exchange rate, are far more likely to fluctuate erratically and can be harder to predict. However, keeping an eye on the news for mentions of oil-pricing changes and significant fluctuations in exchange rates can provide some foresight. But how should companies who depend on fuel respond and safeguard their fleets?
Bulk Buying Fuel for On-Site Storage and Dispensing
Bringing your fleet’s fuel in-house with on-site storage and dispensing from a bunded fuel tank will give you greater control over your fuel usage. Of course, all fuel is affected by the factors mentioned above. Still, bulk buying may allow you to negotiate a better price than you would pay at the pump and will give you greater oversight of your fuel usage through a fuel monitoring system.
By monitoring your fleet’s fuel usage, you can capture all your vehicles’ odometer readings at the point of refuelling, track throughputs and fuel wastage and receive automated and concise reports that can help you identify where savings can be made.
Focus on the Things You Can Influence
There is very little that companies can do to influence global fuel prices, politics and exchange rates. When finding ways to manage rising fuel costs, it pays to focus on the things you actually can control.
Invest in Fuel Management
We touched on fuel monitoring and on-site fuel storage, and both these things can form part of a comprehensive fuel management system that gives you complete control of your fleet’s fuel usage. By creating a bespoke on-site fuel station, you’ll be manage your fuel in real-time, with custom reporting on throughputs, tank levels, and variances automatically sent whenever you are in the world. In addition, a complete fuel management system safeguards against fuel theft and helps improve vehicle efficiency.
Utilise Fleet Metrics
Monitoring the condition of your vehicles is essential to keeping running costs down. You can use metrics to track fleet maintenance and expenses, identifying potential problems before they happen and rectifying the issue before it becomes too costly. Metrics can include things like Daily Vehicle Inspection Reports, vehicle odometer readings and fuel usage data.
Optimal Route Planning
A well-planned route can significantly reduce the distance travelled and the time taken to get from A to B, which in turn, saves fuel. Optimised route planning, particularly for fleets in the logistics sector, is crucial to mitigating the rising cost of fuel. Optimised routes go beyond simply finding the shortest distance, and depending on the type of vehicles you have, what is optimal for your business may not be the best route for another. For HGVs, avoiding steep hills will be a priority, but light-duty vehicles and cars may be better served by a hilly route that allows them to circumnavigate congested areas.
Regular Driver Training
Regular training for your drivers, even the experienced ones, can help instil good habits that can contribute to better fuel economy. This may include raising awareness of vehicle idling and how idling actually burns more fuel than restarting the engine in most cases. Drivers should also be aware of the impact high speeds, high torque and harsh breaking have on fuel economy.
Although there is little to be done about the price of fuel, a combination of everything discussed will help to bring down the cost of running your fleet and give you the tools to manage fluctuating fuel costs. If you are interested in understanding more about how Fueltek can help you take control of your fleet’s fuel usage, please view our brochure to explore our extensive range of fuel management solutions. Then, fill out our online enquiry form when you’re ready to learn more.