Fuel increases

….and how to manage them.

For any vehicle owner running costs are always a constant consideration, but for businesses they can be a major source of worry. Unlike many other monthly outgoings such as property rent, mortgage, tax and employee salaries, which in general remain the same, it is difficult to factor in the cost of filling up fuel tanks and keeping employees on the road, ensuring customer demands are met.

One key headache for fleet managers with vehicles that travel across the country is that, diesel costs can vary significantly depending on where it is purchased from.

Fuelling up at vehicle at a branch of a well-known petrol station network in Manchester is likely to cost far less than filling up at the forecourt with the same pumps and branding in London.

The same applies when using motorway service stations, which notoriously charge much higher prices for fuel. It can be argued that the convenience of being able to leave the motorway to fuel up and then immediately re-enter without having to navigate a series of country roads is included in the cost, but that does not change the fact that drivers are paying much more for the privilege.

Uncertainty over costs

For organisations that operate nationwide and have a network of drivers and vehicles, it can understandably range from difficult to nigh-on impossible to determine exactly how much fleet running costs will be each month; uncertainty that can cause a fair amount of stress. There are, however, steps that fleet managers can take that not only help to keep costs to a minimum, but also provide a large degree of visibility over how much needs to be allocated each month to fleet operations.

Hard to predict

One consideration that will remain is uncertainty around the price of fuel, the price of oil has long been an accurate indicator of whether diesel and petrol prices would be imminently increasing or decreasing, production and refining of oil only accounts for a quarter of the cost at the pump, according to the RAC, while stockpiling of reserves means there is little way to predict imminent fluctuations.

Fuel duty and taxation actually account for the vast majority of the price; in the region of 70 per cent of the cost is taken away by the government, although the chancellor did please businesses and motorists with his announcement in the 2016 Budget that fuel duty would be frozen for the sixth consecutive year, despite predictions of an increase.

The introduction of new schemes to enable drivers to gauge fuel prices in motorway service stations before exiting could also help them to assess potential fuel costs before filling up and know whether to delay their pitstop until the next junction, if feasible.

Although some factors will always remain out of control, having visibility over as many aspects of the fleet as possible can help to form a clear idea over what monthly costs will be and help to provide much-needed peace of mind.