By Glen Sokolis, Sokolis Group
There are only a few things that are out of the hands of fleet fuel managers; the price of fuel itself may be one of them. But there are other ways to still have a handle on your fleet fuel management. Take, for instance, the WAY that your fleet fuels. Do you use mobile fueling or fuel at a retail station? Mobile fueling could be one of the things a fleet fuel manager has under control, and its convenience is unmatched.
Fueling at retail may not just incur the price of the fuel your driver purchases. Take into account the miles it may have taken for the driver to find or get to that station. Consider the time and miles used to detour from the designated route to find that station, those miles did not have to be wasted. Also the unpredictability of the fuel prices at that fuel station may not accommodate your planned fuel budget. Imagine too if the station was busy and the truck had idled for more then a few minutes; there goes more fuel down the drain. Mobile fueling will essentially bring the fuel to you. The trucks will be tanked up and ready to go each day, and now there's no reason to have drivers deviate for fuel.
Another factor to contemplate is the driver and labor costs. If that detour for fuel took half an hour, including fueling time, how much were you paying the driver to fuel up? If that vehicle had more then one occupant, that would have doubled the wages you paid for a simple fleet fuel stop. Mobile fueling would eliminate the need for a driver to use precious drive time to fuel up and allow for a more efficient and productive trip. We all know how difficult hours of service can be to comply with.
Mobile fueling also would help to keep the fuel budget under control, as there may be volume discounts or a possibility of price negotiability. In some cases, prices may be locked in. Invoicing will be easier, as all the fuel is from one source. With mobile fueling, there's no need to be overwhelmed by fuel prices or worried about drivers fueling on the road. In fact, mobile fueling may even offer peace of mind.
If you look at the whole picture cost to fuel, that is fuel cost and drivers' labor, what are you really paying? If your fuel margin at a retail location is 15 cents and you're paying your driver $16 an hour and it takes him half an hour to fuel, it just cost you $8 for him to fuel your truck. Take that one step further, and let's say he filled that truck with 50 gallons. Your cost for your driver to fuel that truck was 16 cents a gallon. You paid the driver 16 cents a gallon and the retail location another 15 cents a gallon in fuel margin for a total of 31 cents a gallon. You might be able to have a mobile fueling company fleet fuel your trucks for 25 cents, saving you 6 cents per gallon. On a 50-gallon fuel up, that's $3.00 if you have 30 trucks. That comes out to savings of $90 a day, and now we are talking fuel savings.
Mobile fueling might not be for every operation or for all areas of the country, but it is something to think about as you look toward saving money in total fuel cost in 2010.
By Glen Sokolis, Sokolis Group
&newsThere have been so many discussions on oil and fuel prices these last few weeks, especially with prices soaring up to $84 in early January to taking a dramatic hit back down to $80 only three days later. So when you cannot control the price of fuel, what can you do to have better fuel efficiency in your fleet or own personal vehicle? Below are two main points to consider when fuel economy is on the table.
1. Let's start with the driver. Drivers control the vehicle, so it's no wonder they would have a great impact on the fuel efficiency of it. Be sure not to let an angered or disgruntled driver behind the wheel; if a driver is angry or mad, he may treat the truck with heavy shifting or improper shifting. Trucks handled the proper way will do the same with fuel; a rough road would waste fuel. Let's not forget speed; driving the speed limit (or under 65 mph) also reduces the vehicle's excess fuel usage. Drivers can also keep the windows rolled down when they are not driving along the highway, as the air conditioning will only use excessive fuel. However, for longer highway trips, the air conditioning is a better choice to the window because of the drag that can be caused by a rolled-down window. Finally, have the driver be sure that the truck and trailer are in proper alignment, not only for fuel efficiency but also safety.
2. What about the truck itself? Not modifying the truck's original manufacturing with 'add-ons' that are not necessary will keep wind from 'dragging' the truck and making it work harder. As strange as it sounds, a clean truck also runs better, at least aerodynamically that is. Keeping the truck free of dirt and grime, which weighs the vehicle down, will create a sleek exterior, while a nice wax will improve the effects the wind or down force has on the truck. Proper maintenance will also keep the truck in great shape for optimal performance, not only now but also later on. Scheduled oil and filter changes along with tire pressure checks are all part of maintaining the vehicles health. Also, be sure that there is some indispensible fuel theft prevention in place, like anti- siphoning devices or cap locks.
Basic fuel management can be done on the road with the driver, in the shop with the mechanics and in the office with fuel management. Keeping your trucks roaring and drivers up to date on required standards will make your efforts see great results.
By Glen Sokolis, Sokolis Group
Last week's Friday Fuel included a discussion on some factors that drive oil prices such as current weather conditions and stockpiles, or inventory, around the world. Today's topic will continue on with the machine behind the price of oil. Since oil is a world commodity, there are not only many factors, but they vary by each country.
A constant saying heard throughout the last few months has been 'the dollar is weak.' So what does a weak dollar have to do with oil? Well, to us a dollar is always just that-a dollar; it's how relative it is to other currencies that make it weak or strong. Perception of the dollar also dictates this, what value the currency traders view the dollar as having. They decide or perceive this by reviewing economics and treasury bonds. Since crude oil is mainly traded in U.S. dollars, that's where the two lines cross. If you can't immediately change a weak dollar, do what you can to raise the oil price to try to meet the mark the dollar is lacking.
Current events are also another aspect of what's behind oil. The U.S. imports close to 60 percent of its oil, so when there are wars or crisis in those other nations, one doesn't need to wonder why prices rise during times of uncertainty. The U.S. imports from a variety of places including Canada, Saudi Arabia, Venezuela and the Persian Gulf, to name a few. In recent news, Russia and Belarus were in complicated and, at times, heated negotiations over 2010 oil supply prices. At one point Russia even cut supplies to Belarusian refineries. Any turbulence in a country that has oil or needs oil will always make the news, and will definitely affect prices.
Another and major piece of the oil puzzle is OPEC, or Organization of the Petroleum Exporting Countries. OPEC was designed to help countries secure and regulate the supply of petroleum and to be sure of a valid profit for those countries. Initially OPEC, which was created in the 1960s, was designed to bring strength to smaller oil producing countries, making sure they had rights and support in the market. That still holds true these days. OPEC now is in a position of power to reduce supply throughout its various member nations, thus raising prices to keep their respective currencies in a healthy financial state.
October 2007 was the first time crude oil broke $80 a barrel. Since then, in 27 short months, we have all seen prices go to highs of $149 a barrel to lows of $32 a barrel. With 2009 alone, the price of crude oil started at $32 and finished just under $80 a barrel, with several weeks in between over $80 a barrel. With the economy hopefully improving, what 2010 will bring is still a mystery. One thing is for sure; oil prices will be moving up and down based on many different factors.
As 2010 revs up to be unpredictable, take heed of the various dynamics that control the petroleum prices. A recent calculation shows that gas pump prices may reach beyond any seen in 2009, as a result of the 14 percent increase in crude prices since December. Fuel management may just be the only constant one can control in this upcoming year.
By Glen Sokolis, Sokolis Group
Oh, the commodity of oil, how its price changes and bends at the drop of a hat. Since December, when prices were at the $70 mark, oil has taken a ride all the way up to $82 earlier this week. An increase like that must have some serious dynamics behind it! We'll examine a few of those factors as we continue to see the price almost double since this same time last year.
One of the most obvious reasons that oil has risen so speedily is thanks to good old Mother Nature. One of the coldest winters is currently hitting the U.S. Northeast. Record snowfalls in New England has increased the home heating oil demand. According to the International Energy Association (IEA), nearly 8.5 million homes use oil as their main source of heat. While many of those homes try to get their expected need of winter oil delivered in the summer months to avoid extreme prices, their tanks do not hold enough to carry through so many seasons. The Northeast is not the only area feeling the cold and ordering extra oil for heat; Florida is expected to barely reach 60 degrees, whereas the average is generally in the 70s. Many southern regions are even dipping to subzero temperatures.
More specific and less frigid factors in the rise of oil prices are the stockpiles, which are also on an up and down scale, and the operations of refineries. Stockpiles themselves are a constant issue, as is with any business, as a result of supply and demand. Recently, there has not been a great demand on oil, so the inventory kept rising, driving prices down. The excess of oil remained in the millions of barrels while the draw and need was only in the hundred thousands. Floating offshore storage had even reached over 150 million barrels on these vessels in September. If refineries continue to produce at 80 percent capacity, as they have in recent weeks, those inventory numbers will slip. In fact, at least five U.S refineries have closed their doors this year due to the weak demand and stockpile overflow. Decreasing the operations will still allow production, just at a slower output rate.
Just as a drop in a lake will cause a ripple effect, it's not just U.S factors that will be driving oil prices. World events often are just as essential. Take, for example, China's economy; it has expanded in such a flurry that it is becoming one of the lead nations in energy consumption, and the demand for oil in China is rising. Constant unrest in Middle Eastern countries and the position of OPEC are also heavily weighed when it comes to petroleum products and the value of the same. Commodities are like soup. When all the right ingredients are there, everyone is satisfied with the outcome, but one wrong measurement or element and the soup is either useless or only one individual will take a liking to it.
There are a lot of other issues that make a barrel of oil rise and fall, but we'll cover that in the next installment.