Posts Tagged ‘diesel fuel prices’
By Sokolis Group - June 13th, 2011
Exxon, Shell, BP fighting over fuel prices? No. I said, giants Saudi Arabia, Iran and the rest of OPEC are fighting over increase production should happen. More crude oil produced should make way for lower diesel fuel prices and gas prices.
Normally, what happens at an OPEC meeting from a standpoint of increasing or decreasing oil production is predetermined before the meetings even begin. The members of OPEC decides a few days before the meeting. That wasn’t the case this week and it could have huge effects in the future when it comes to your fuel management of diesel fuel prices and gas costs.
Saudi Arabia the worlds largest producer was all for an increase in production fearing higher diesel fuel prices and gas costs on the West (US) would have a negative effective on the worlds economic recovery. Some of our favorite countries please excuse the sarcasm Iran, Libya, Venezuela to name a few don’t feel the same way. The main reason is the only OPEC country that really increase production is Saudi Arabia.
They already produce 10 million barrels a day, which is around 40% of all OPEC oil. OPEC as a group produces 42% of the worlds oil. So how much spare oil can the Saudis produce about 3.2 million barrels a day, more than 3 times the amount of all other OPEC countries combined.
The big question that will effect you fuel management and fleet management solutions is will the Saudi raise production even though the other members of OPEC voted not to?
I believe they will. Will it lower our fleet fueling prices? I am not as sure about lower fuel prices as I was just days ago. The speculators can’t seem to give up on $100 plus crude oil.
As with everything in life things change all of the time. You might want to be selective to where you use your fleet cards when pumping.
Tags: diesel fuel prices, fleet cards
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By Glen Sokolis - May 18th, 2011
It’s really hard to believe that diesel fuel prices and gas prices are falling, especially if your local gas station hasn’t lowered prices yet. Ok, I realize that MOST of us have not seen the lower fleet fueling prices at the pump yet. This is basically because most retail locations are taking their time lowering their prices—and your fueling costs. But yesterday, in the fairly small town where I live, the price for gas at a low-cost retail station was down to $3.93 a gallon. A half mile away it was $4.09 a gallon, and half mile in the other direction it was $4.19 a gallon. Knowing the fueling market as well as I do I recognize that even that low-cost retail station is making a nice margin. The others are knocking it out of the park, but that isn’t good for consumers. Keep watching, prices will drop down near you soon, fueling costs will get better, trust me.
What is causing a dip in diesel fuel prices now, especially after prices went up 20 out of the past 22 weeks in a row? And, why now? It is unusual, especially for this time of year as we approach summer when prices tend to be on the rise. Let’s not forget our daily friend the gasman that we see the prices daily on roads and almost all of us have to see at least once a week for a fillup, those gas prices are falling too. The big question is why? And the answer is simple, but yet complicated.
As we look back for clues, remember that diesel fuel prices started their run of increases around November 29, 2010 when national DOE prices were $3.16 and a barrel of crude was $81.65. That was about the same time many of the large brokerage houses came out saying that crude oil was going to go over $100 a barrel. Uncertainty creates fear, but by the time we got to February 14, 2011 crude oil was still only at $83.66 a barrel. Diesel fuel prices had climbed to $3.54 based on supply needs for heating oil in the Northeast United States and China’s continued increased consumption. Then, all heck broke loose.
Fighting and political unrest in the Middle East scared investors who speculated that there would be interruptions in oil supply. Libya’s civil war created a very small supply issue. Fuel prices took off. In mid February the price per barrel was $83.66 and by April 29th it was up to $113.39. During that same time, the U.S. dollar went to one of its weakest levels in history. Investors were betting that fighting would continue in the Middle East that could create oil supply issues as we begin the summer driving season and the usual increased demand for gas. There is a lot of tension, speculation and fear.
Take a snapshot of today. By all accounts of market fundamentals, things look fine. The world’s largest oil producer Saudi Arabia h has committed to pick up any lost supply from other countries and stated that crude oil prices should be in the range of $80 to $90 a barrel. You, me and every other car-driving American have cut back on our gas purchases when they hit $4/gallon. The DOE shows 2.4% less gas being used this year than last year over the last four weeks. The U.S. dollar is getting stronger. Fighting continues in Libya, but the initial fears have gone away. We killed the most wanted man. And speculators woke up. Don’t poke the bear!
The sell off happened the first week of May and now with new trading policies on speculators we shouldn’t have crazy ups and downs. All great news, I can hear you saying, but your real question is why am I still paying so much if crude oil prices are down $15 dollars a barrel? Time. Give it a few weeks. As a very rough basic gauge: for every dollar crude oil goes down, diesel fuel prices and gas prices will go down between 2-3 cents per gallon.
Let’s not forget that Mr. Truckstop and Miss. Retail Station have been taking it on the chin the last several months so they are looking to hold onto some of that margin that is in the fuel pricing now. What goes up fast comes down slow. I would expect to see National DOE diesel fuel prices by July to be close to $3.75, maybe even less. It all depends on how long the retailers can hold their margin. Retail prices for gas should fall 35 cents over the next few weeks, but there will be retailers out there trying to hold onto every last penny.
Be smart and shop well. If you have any fuel management issues, feel free to reach out to us and we will walk you through.
Tags: diesel fuel prices, fleet fueling, fuel savings
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By Glen Sokolis - April 7th, 2011
We all know that fleet fueling prices have gone up. We see it everyday at the pump. We feel it in our wallets. But why? Is it because of supply and demand? Is it because of volatility in the Middle East? Just what exactly is driving diesel and gasoline prices higher? It’s simple. The way this fleet fueling professional sees it, it’s all because of a four-letter word that begins with F.
FEAR. And looking ahead, most people may be afraid that fuel prices will continue to increase. It is hard to predict just exactly where they are headed. But I’m going to go against the norm and say that fuel prices will go down. And I’ll tell you why.
Not knowing the certainty of what the future holds, we can look to our current and past trends for a glimpse of what may happen. Americans have been bullish on fuel since the middle of last year. There is always a demand for fleet fuel, but Americans are already slowing down on the amount of gas they are buying. In the past, experts have reported that when gas hits $4 a gallon, there is a psychological trigger for average Americans to change their buying habits. New statistics show that even at $3 a gallon people are driving less. So with current prices averaging about $3.50 a gallon, people are continuing to scale back their time behind the wheel. Less driving and fewer purchases at the pump leads to an increase in our domestic surplus. Keep in mind that the summer driving season is on its way and that means gas prices usually go up. I’ve also noticed that the amount of money being traded in the futures markets is about half of what it was a couple of weeks ago. This tells me that a lot of buyers looking for a quick upswing have enjoyed their upswing and are now getting out.
“Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline.” - Philip Roth, American Novelist
And, I’m not alone in the Fear-Factor-Theory. There has been a view amo aaam that the crude oil market has $10 to $30 built into it based on fear and speculation. As always, I will continue to monitor and analyze the global and domestic industry factors and modify views as information changes. With what we have in front of us now, I see crude oil going under $100 by the middle of April and down to the mid $90’s by May. This will drive down diesel fuel prices and gas prices. By the middle of the July when the summer driving season is already over from the refining and distribution perspective, I think we could see prices drop into the upper $80’s a barrel. This could bring prices back to $3.30 a gallon for diesel fuel and $3 a gallon for gasoline in most parts of the country.
Inventory numbers released on Wednesday by the Department of Energy show a build up in crude oil again and gains in diesel fuel while gas inventories went down slightly, but almost 1.9 million barrels less than expected. China tightening its monetary policy to try to curb inflation in that country is another sign of fueling demand possibly going down.
Trades, speculators, and investors…no one wants to be on the short side if more crazy things happen in the Middle East. I say, the Middle East is the Middle East. We’ve got fuel inventory, supply is not a problem. So stop worrying and get back to reality, prices will go down. Don’t be afraid!
They won’t stay down forever of course. In the real world, demand will pick up and supply at this point will have a hard time keeping up. But we are still six months away from that.
Be brave, be bold! It’s going to get better.
Tags: diesel fuel prices, fleet fueling
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By Glen Sokolis - April 5th, 2011
It’s easy to take a seat on the sidelines and believe all of the things you read in the headlines about diesel fuel prices and gas prices going even higher. Of course those kinds of stories make news and help ratings. So, to answer the question in my own headline, ‘Are diesel fuel prices going up?’ – you betcha.
But let’s take a moment to look at the fundamentals of the oil market. Supply is good. Inventory levels are very good. Demand worldwide is a little soft right now with the crisis in Japan. So why are fuel prices going up? Why are we all paying so darn much for fueling our fleet and personal vehicles? Heck, my wife said to me the other day, “I was going to get premium gas because the car engine was making a knocking sound, but there was no way I was going to pay over $4.00 a gallon!” Instead she got what she normally does, regular, paid $3.65 and her new car is still knocking.
I believe personal and fleet fueling costs are going up because of FEAR! FEAR! FEAR! Everyone is scared of the unknown. What if all this turmoil continues in the Middle East? Yes, the situation in Middle East is a mess and as I just wrote in my column, it has been a mess for a long time and will probably continue to be a mess for the foreseeable future. What if the U.S. and global economies continue to grow and there is a greater demand for oil? Yes, let’s hope the economies improve. And yes, the world’s energy demands will continue to increase and so will demand for crude oil. Even with natural gas, nuclear, clean coal, solar and electricity we are dependant on crude oil as the biggest source of energy.
Well, what if? What if? What if? My whole life I’ve played the tiresome and very complex game of asking myself “What if?” Lately, I have tried to stop, but I can’t just yet. How about this…what if we all just said ‘NO!’ to ‘what ifs?’ Just for a moment, let’s deal with the real facts on the table. Get rid of fear and not speculate about what might happen tomorrow. Truth is we have a good supply and we have good inventory, therefore diesel fuel prices should be $3.30 a gallon, gas prices should be $3.10 a gallon and crude oil should be around $70-$80 a barrel.
Let’s look at some more facts. Do you know who makes more crude oil than anyone else in the world? Saudi Arabia. How much? Just under 20% of the world oil. Do you know what the Saudis believe the price of crude oil should be? $70-$80 a barrel. Do you know who is the second largest crude oil producer? Oh Canada we love you! The Canadians are pumping out 13% of the world oil. Add the two together for 33% or one third of the world oil. Iraq is number four on the list with 9% of the world oil, followed by Kuwait at number five. Put them all together and that is almost 50% of the world oil right there.
Oil is the lifeblood for most of the oil producing countries that I did not mention here who make up the other 50% of world oil. It’s not in their best interest to cut off supply or price themselves out of the marketplace. That would be like shooting themselves in the foot.
However, it is unfortunate that fear is the reality right now. And even though I’m thinking prices are going to come down by the end of the month, followed by another drop in May, that won’t be the situation for too long. The supply will continue to flow and add to our already good inventories. There’s even a little surplus out there right now. Americans don’t like paying over $3.50 a gallon, and we will cut back our driving and subsequent spending on gas. So with my math, I’m coming up with $108 a barrel; $80 for fuel and $28 for fear. I think that the cost per barrel will dip below $90, and then go back up to $100 by the end of the year. However, after that, we might not see it come back off of that number.
So be prepared to reach deeper in your pocket to pay at the pump. No one likes the sound of $4 a gallon for gas, especially my wife, but $4 just may be the new regular number in 2012.
Tags: diesel fuel prices, fleet fuel cost, fuel prices
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By Glen Sokolis - March 22nd, 2011
Yes, the DOE national weekly average for diesel fuel prices went down for the first time since November 2011. But don’t get too excited about your fuel management budget because they only went down $.001. That combined with a continued increase in gas prices does not look good for your tanks. Certainly your fleet fueling program will continue to feel pressure.
Where is the fueling market going to go from here? Higher! Yes, I said higher. This week when your drivers swipe their fuel cards at the truck stop, diesel fuel prices will be up, although not by much. Long term, I think we are close to the peak on the diesel side, but don’t let out a big sigh of relief just yet.
As for your fleet cards, they will still be hurting with high gas prices due to increased demand and the upcoming almighty summer driving season. Even that won’t crush your fuel card purchases too badly. Americans tend to stop buying gas at $4.00 per gallon, so I don’t expect it to get to that point everywhere, only in those states with high fuel taxes. I speculate a peak at $3.85 a gallon in most places.
What is your fleet fueling strategy now? If you’ve planned ahead and have a fuel management program in place, then good for you. However, if you’re feeling the pain of high fuel prices and still uncertain what your next steps are, now is the time to revamp. Let our fleet fuel experts provide a comprehensive analysis and set you up with solutions for success. Don’t settle for reaction — take action. Make the call 267-482-6155.
Tags: diesel fuel prices, fuel card, Fuel Management, fuel prices, fuel tanks
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By Glen Sokolis - March 17th, 2011
Although, I think we could all use a little luck o’the Irish this St. Patrick’s Day. And, who wouldn’t like to find a pot of gold at the end of the rainbow, or at least some extra “green” added to their corporate bottom line? This is especially true for those of us working hard in the fleet fuel management industry. We may be feeling green today, but not as it relates to Ireland and shamrocks. We are just sick. Sick of the uncertainty in the Middle East and subsequent skyrocketing cost of diesel fuel and gas.
Unfortunately, scrambling to react to increased fleet fuel costs and trying to make sense of an unprepared fleet fuel management program are not the only things out there that will make you sick these days. How about radiation and those poor people in Japan? This time last week, they were probably worried about the same things we are when it comes to fueling. Japan is the third largest consumer of oil. Like us, they had seen their fleet fueling costs increase because of the rising price of crude oil, diesel fuel and diesel fuel additives. My how 24 hours changed their view and the world dynamic.
Many fleet fueling programs are going off line along with so many other things. The Dow is down below 11,650 when just a couple of weeks ago it was over 12,350. That is a 6% drop. Throw into the mix that diesel fuel prices increased for 15 straight weeks, inflation keeps edging up, and the housing market is still down. And of course, as I’ve already mentioned, the volatile situation in the Middle East keeps us on the edge of our seat. Who knows what is going to happen there? I don’t. But, I do know that it will affect how much you charge on your fuel card. Thankfully the Saudi’s like us. “Like” might be a strong word, but they do “need” us and we need them. So I believe they will do everything possible to make sure fleet fuel continues to flow out of their country and into ours.
So the fuel keeps coming but we have to pay more for it. Did you know that not all fleet fuel companies are being affected the same by the gravity of all these global circumstances? There are fleet fuel managers who had the foresight to establish great fleet fuel management programs with fleet fuel experts. Their comprehensive, customized systems afford them the luxury of a buffer against the unknown. As a result, there are fleet fuel company presidents, CFO’s and managers out enjoying some green lager today while others are stuck at their desks, just green with envy. And you know who you are.
So on this sunny St. Patty’s Day, let’s hope that we all see a rainbow and a pot of gold at the end of it. After all gold is trading near an all time high.
Tags: diesel fuel prices, fleet fuel, fleet fuel management, fuel card
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By Glen Sokolis - February 27th, 2011
If you thought your fleet fueling was going to get cheaper because the spring weather is approaching, check again. Gas prices increased 17 cents last week alone. The national fueling cost for gas is $3.33 a gallon. Most don’t believe the worst is over. It might be time to pull out a pen and paper as a fleet manger and start redoing the old fueling budget for 2011.
This appears to be a very difficult year for a fleet managers and their fuel management budget. I would believe they every fleet manager is looking for some relief or a fuel managemet system to lower fleet fueling costs.
Due out Monday afternoon will be the DOE weekly diesel fuel prices. Most fuel companies predict diesel fuel prices will continue to climb over the next several weeks. The best most fleet management can do at this point is seek shelter. Protect their fleet companies buying process by reviewing current fleet fueling programs.
Yes, as a fuel management company we are going to tell you to review your fueling programs. Most fleet companies programs that we review have major issues and can be correct with the proper fuel management staff, fuel savings fresh ideas, discount fuel card programs and fleet cards that offer controls.
Gas prices up 17 cents for one week. Any guess how much diesel fuel prices will be up for the same one week?
Tags: diesel fuel prices, fleet fueling
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By Sokolis Group - February 25th, 2011
Yes, diesel fuel prices have gone up 12 straight weeks and will probably go up several more weeks but what has caused this? We all know that it has been a very cold winter, so we have had a diesel fuel supply issue to start. Out of a barrel of crude oil, it only produces 25% of heating oil or diesel fuel. Basically, there is a competition between heating homes of fleet fueling for trucks. Internal supply and demand issues for the same product battling for pipeline space, storage space, etc.
The real move on your diesel fuel prices is the Middle East. As a fleet manager there are a lot of unknowns that you deal with in fleet management. What are tires going to cost, lubes, diesel fuel prices, new engines and everything else that might fall under your fleet management system. When it comes to the fleet fuel that is running your fleet companies vehicles the price is going wild because everyone is running scared. If fleet managers ran as scared as some of these fuel traders your company might think that you were crazy.
First Egypt made fuel savings hard to come by because fueling prices rose. Egypt barely produces any oil but it’s the Middle East. One of the hottest hot beds in the World and 50% of oil is produced there. When Egypt was successful over throwing its leader, Libya decides its high time for them to overthrow there leader (I would agree). That is when the hysteria kicked in. Libya mind you, only produces 2% of the World’s Oil but the fear factor that this could spread to other countries still makes oil traders jumpy.
The 2% of Libya oil that is lost and its probably only lost temporarily can be made up by Saudi Arabia. Saudi Arabia is sitting on a lot of extra crude to replace Libya.
Hopefully, in a short period of time, things will resume back to being “normal in the Middle East” and we can see fleet fueling prices come back down to reasonable levels. This will allow you fleet management budget to recover from the heartache it has felt so far this year.
Tags: diesel fuel prices
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By Sokolis Group - February 23rd, 2011
You spend months putting together your fleet management budget. Looking at all line items to determine if you have accounted for everything your fleet management department needs or if you’re over budget and need to cut. There is always that one line item that worries because it is so unpredictable, fueling. Whether it is your diesel fuel price or gas price for your fuel management, you know in almost all cases it can go anywhere.
This week diesel fuel prices rose another 3.9 cents according to the Department of Energy. This is the 12th straight increase for diesel fuel. One year ago diesel fuel prices were 74.1 cents cheaper nationally then they are today. Your fuel management systems are about to really get tested.
Crude oil prices are up 9.6% to $94.49 a barrel since Friday. In 2 words, Middle East.
Saudi Arabia is saying it will protect production. That is nice to say but I am not sure if they really can feel good about that. After all don’t you think other countries leaders who have had changes the past few weeks, felt the same way? What happens is the Saudi people strike? The oil might be protected but it isn’t going anywhere. That is not going to be a positive impact on your diesel fuel prices. I don’t believe it’s time to panic. I think it’s a time to be aware of what is happening. For some many years the U.S. has lended its support against others trying to invade or disrupt that area of the world. We all knew it was about the oil. What we never figured is their own people would turn on their governments.
Today, I listen to a pod cast with the CEO of Gulf Oil, Joe Petrowski. He believed that diesel fuel and gas prices were going to move much higher. He felt almost certain that we would see $125 crude oil prices. He felt the situation was disheartening. Joe is a very bright man and has a wealth of knowledge around fuel management. While I believe fleet fueling prices will move higher over the next few weeks, I don’t believe they will be maintained long term. That is not to say that we won’t be around $3.80 a gallon for diesel fuel prices and $3.50 for gas. We will have to let this run its course and hopefully, your fleet management solutions work.
Tags: diesel fuel prices, Fleet Management
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By Glen Sokolis - February 21st, 2011
I was going to write an article on Friday about what happened to all of those people, who way back when, predicted $100 a barrel for crude oil and increased diesel fuel prices and gas prices right along with it. In fact, I admit, I was one of those people. Wasn’t almost everyone? Well, many things have happened since then.
- Crude oil prices did make it to $93 a barrel, then retreated back to the mid-to-upper $80’s
- Gas prices continued to go up
- Diesel fuel prices went higher too
- Revolution erupted in Egypt, a key supplier of crude oil
- Worries heightened for everyone as domino effect of civil unrest spreads in the Middle East
- Fuel supply remained strong in the U.S.
If not for the big turn of events in Egypt, the Middle East probably would have remained calm (or at least as calm as the Middle East can be). Other countries such as Libya, Bahrain and Tunisia have jumped on the revolution bandwagon. The uprisings have lead to a trickle down effect that could turn out to be a real horror all the way across the ocean to gas pumps here in America. Pun intended. Although it’s not an oil producer, even Bahrain has international traders closely monitoring its country’s political tensions. The U.S. has important strategic interests there, including the positioning of our U.S. Navy’s Fifth Fleet tasked with patrolling oil shipping lanes and monitoring Iran. You can feel your fleet fueling budget increase with almost every paragraph. And, there’s more unsettling news. Iran is attempting to send its war ships through the Suez Cannel in order to provoke a response from Israel. Why? To take the focus off of its own internal unrest, and put the spotlight on Israel. It’s one of those situations where the people of Iran might say, “I hate my government but I think I hate Israel more.”
Feeling helpless? Wondering what you are going to do? You certainly can’t control global happenings, but you do have the power to get a grip on your company’s fuel management. Now is the time to figure out what’s best for your fleet fueling. Here are more reasons not to delay:
- Libya threatened on Sunday to cut oil exports to western countries within 24 hours unless authorities stop what they called the “oppression of protesters”
- Major oil companies did one better and pulled workers from Libya because of the hostile threats
- Oil reserves from OPEC are at their lowest level in 2 years reports the EIA
Saudi Arabia supplies about 12% of global oil production and sits on at least a fifth of the world’s oil reserves. Saudi Arabia faces the same problem that was a major driver of the protests in Tunisia and Egypt to begin with: youth unemployment. Data by the Central Department of Statistics & Information (CDSI) estimates that 39% of Saudis between the age of 20 and 24 were unemployed in 2009. The world’s oil supply does not have enough room for margin when it comes to fuel management supply. Therefore, if these interruptions happen and go on for any length of period we could easily see crude oil prices of $125 – $150 per barrel.
To think just a couple of weeks ago, it looked like all of the fears of $100 crude were just that. I had called it a special energy that people wanted to see $100 crude. The fact is now, most people are really nervous. This is not a supply and demand issue that people thought would push diesel fuel prices higher. This is civil unrest. If fueling prices push that high, the only thing fleet companies can do is to control the controllable. What I mean by this is simple:
You can’t control fleet fueling prices going up to $4.00 or $4.50 a gallon. Not unless you have some kind of fueling hedge in place. What you can do though is control your gas and diesel fuel prices in other ways. I’ll share some of my expert advice with you here:
- Buy diesel fuel better through your fueling vendors.
- Reduce idling on your trucks.
- Increase your fleet management by making sure, trucks are running at optimal performance.
- Fleet managers should provide additional driver training on shifting, braking and speed management.
- Consider mobile fueling vs. fueling at a retail station. It’s not always about what diesel fuel costs but what does it cost you to fuel your trucks. For most fleet companies there is an out-of-route mileage component and a labor cost. If mobile fueling can cut those costs down or eliminate them, how much additional overall fuel savings do you have?
- Evaluate back office and frontline controls. Ask yourself: What controls do you have on your fuel card program? Is the fueling information coming from your fleet card easily integrated to your accounting system? Can you take the fuel cards information and put it into your fleet management system or your fuel management system? If these things are easy for your staff then you have waste time that relates to your overall diesel fuel price, right?
If you’re not sure of the answers, or even what questions to ask, it may feel like it’s time to run to the closest bridge and jump. But don’t. Be assured, there is help available. Let’s face it, cooler heads will prevail. If you’re ready for some expert advice or direction, Sokolis Group will help you manage the unexpected. 267-482-6160, gsokolis@sokolisgroup.com
Tags: crude oil, diesel fuel prices, Fleet Management, Fuel Management, mobile fueling
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