November 2010, TruckingInfo.com - Feature
Diesel fuel prices are going higher, because the Department of Energy told us so last week
As fleet fueling costs increase, if you don't have fuel management systems in place, your fleet company's operations cost will increase as well.
Does your staff or fleet manager have a plan? They should.
A few days after the DOE said diesel fuel prices were going higher, your oil friends and mine, OPEC, raised the 2011 oil demand forecast. Just a month earlier OPEC had said growth would be slow and they thought $70-$80 a barrel for oil (makes diesel fuel prices around $2.95 a gallon) would be the right price for producers and consumers.
Let's fast forward less than one month. Maybe this can be considered bandwagon jumping, but OPEC now says the economy is growing much faster than they thought. Common sense would say no problem; they will produce more oil to keep your fleet's fueling prices around $2.95 a gallon.
Well, the Organization of Petroleum Exporting Countries doesn't think with common sense as much as they think with how much money they can make. They now say the price of a barrel in the $90s (diesel fuel prices $3.30 a gallon) won't hurt the global economy recovery.
My guess is these guys don't own any fleet companies. Will $3.30 diesel fuel prices hurt the economy? I don't know. As we have been below $3 a gallon for fleet fueling we haven't been doing well, so I am not sur adding 30 plus cents a gallon will make life any easier.
Here is where you as a CFO, Director, Fleet Manager must really put the screws to your fleet management. It should all be fresh in our heads when diesel fuel prices hit almost $5 a gallon. I don't think we are going anywhere near that high, but that is not in anyone who is reading this article's control. Your fuel management team needs to be proactive now to achieve controls on your fueling program.
I am sure since fuel's come down from $5 a gallon, some fleets have gotten a little complacent with fleet management programs. You recall:
* Lowering speeds to 62 mph
* Checking air tire pressure
* Proper preventive maintenance schedule
* Reduce idle time
* Air deflectors
* Driver behavior (fast starts, hard stops), progressive shifting
These are just a few of the many fuel savings programs you all put in place 2 ½ years ago. As a fuel management company, I strongly recommend that you make sure that these and other fleet management solutions that you put in place are still in place -- or if you never found the time to do it 2 ½ years ago, do it now.
What else can you do to help your fuel management with climbing diesel fuel prices so that they don't hurt your fleet company's bottom line? I would talk to my fuel companies about pricing. You should review with your staff and fleet managers on your fuel surcharge program. Being ahead of the curve in thinking about things that can affect your fleet management and bottom line is not a bad thing.
You should review your whole fuel management system, from a fuel analysis on how you are fueling now. Review your fuel card or fleet card programs. Determine if having mobile fueling is providing you the overall cost saving you thought it would, or is mobile fueling just costing you more. How much are you paying for diesel fuel additives? Should you have diesel fuel additives if so when?
Every company reading this article runs a different operation. It is up to you to take action with your fleet management programs at $3.11 for diesel and not wait until it's over $3.30. We realize you have limited staff, limited time, and limited resources but you don't want your company to have limited money. Fuel cards, truck stops, fleet cards, mobile fueling, fuel companies want you as a customer. Talk to them. No better time to talk to a fuel management or fleet fueling consultant; they can help you gain time and navigate through what fuel card or fleet card works best for your company. How do my bulk diesel fuel prices rank against other fleet companies, you can ask, or is my fuel inventory management as good as it should be.
Put a plan in place. It doesn't get easier when fleet fueling prices get higher.
Fuel management is a living, breathing function of your business. It will never go away, just like diesel fuel prices will never stay at $2 a gallon.
Glen Sokolis is president of Sokolis Group, a nationwide fuel management and fuel consulting company, www.FuelManagementSokolisGroup.com. You can reach him at email@example.com or (267) 482-6160.
Recent installments of "Friday Fuel:"
* "Bad Fleet Fuel Auditing," 11/5/2010
* "Fleet Management and Fuel Savings," 10/1/2010.
* Are Fuel Storage Tanks The Right Choice for Your Fleet?" 9/17/2010.
* "Are You Comparing Apples to Apples on Fuel Prices?" 9/10/2010.
* "Fuel Management and Seven Tips for Putting Together an Effective Fleet Fueling Program," 9-3-2010.
* "Cheap Diesel Fuel Prices? A Distant Memory", 8-27-10
* "Fleet Fuel: A Look Back and a Glimpse Ahead", 8-6-10