The commercial fuel market is complex at the best of times. However, in a year that has seen many factors impact the price of fuel, it is important to take a look at these factors and help fleets with the best tips in managing their fuel consumption.
The price of fuel has experienced tremendous volatility this year. The cost of the barrel started at $67 in January and fell slightly because of reduced seasonal demand in the US. But February brought some uplift and traders thought there was cause for optimism as China’s virus cases started to reduce, leading to some recovery in fuel price.
However, March brought a ‘perfect storm’ for the global fuel market with the supply battle between Saudi Arabia and Russia. Both nations were producing excessive fuel supplies than the market required which had downward pressure on the price of oil.
Critically, the Covid-19 pandemic was starting to take effect at this point and by the end of the month, the UK government enforced lockdown, which had a large impact on the amount of fuel consumed in the UK.
However, some sectors were more impacted than others. The truck was one of those that soldiered on in a show of silent strength as clearly there were still key supplies that needed to get into stores.
Helped by reductions in production levels in May and June, we have since seen fuel prices show some signs of recovery and there is more positive economic data coming from the US, China and Europe which has helped to support todays pricing.
While fuel price is important, there isn’t much room for negotiation. Therefore, managing consumption is critical and how well you do this and how far you travel on each litre will add the most value to your fleets and operations.
It is important to measure driver and vehicle performance as there is no use in buying fuel well if the drivers are not going to use it efficiently. Also, it’s important to measure fuel purchased compared to the fuel used, for example, did all the fuel purchased get used by that vehicle?
There are products and technological solutions that can help with this and with measuring driver behaviour.
It is also important to monitor fuel card purchases. We recommend negotiating the best supplier deal, while also asking yourself if you need access to high cost fuel rather than lower cost sites, such as supermarkets.
It is never too late to work with outside expertise that can help those managing fleets to better control their fuel consumption. In these tough times now is the time to act to save money and increase your margins.
Paul Holland, MD for UK Fuel, Fleetcor
