Happy New Year, Diesel Fuel Prices!

The good news about diesel fuel prices is they are only .231 per gallon according to the Department of Energy's National Weekly report. Diesel fuel prices could be .854 like they were the summer of 2008. The bad news about diesel fuel prices is they are at the highest level now at the end of 2010 then they have been all year. The lowest cost for diesel fuel prices in 2010 was January 4, 2010 at .797, so we had almost a 16% increase. In my view, we are looking for the same thing to happen in diesel fuel prices in 2011. That would give us a price of .74. I don't know if it will get that bad but let's look what is facing us for diesel fuel prices in 2011.

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• China continues to boom
• Inventory levels continue to go down
• The economy continues to gain steam, which will increase trucking demand
• Congress is talking about a fueling tax increase
• Worldwide increase demand

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Let's take a look at each of these topics and you will soon realize that most of these issues for diesel fuel prices are out of your control. The things that are in your control like fuel management, fuel cards, mobile fueling will all play a stronger part in your fleet companies success in its fleet management in 2011.

China is a topic that will never go away. They have approximately 1.5 billion people. They don't even put that high a number up in front of McDonalds. These people are going from pulling carts, to riding motorized scooters to buying cars. Last year over this year they used 10% more fuel. They will continue to grow and cause demand issues on the fuel supply chain and a strain on diesel fuel prices.

Inventory level had been at record highs for almost all of 2010 but our diesel fuel prices still went up almost 16%. Now inventory levels are shrinking. This has a lot to do with the economy getting better. I know we all don't see it but the economy at least the trucking industry or fleet companies demand on fuel companies is getting stronger. Refineries had cut down on products and now need to ramp up to handle what is sure to be a large increase in demand for fleet fueling in 2011.

Tax cuts, tax increases, taxes going sideways aren't you sick about hearing about taxes. Obama, Republicans, tea party, coffee drinkers what's next. You heard me save I believe we need a fueling tax increase on both gas prices and diesel fuel prices. We need to cut spending as a government too but that is not going to get us the kinds of roads and infrastructure that we need for the future. Somewhere in 2011, I think a fuel tax increase will be passed. I don't know when they will start to collect the money but it is something that hasn't been raised in 18 years on the Federal level and something at least in my view that does to ensure the safety of our roadway system.

The economy has been off over the last few years just like the United States. There is no doubt when our economy is doing well so does the economies of other countries. Well 2011 is going to be a solid turn around year for the U.S. and every other first world country will follow. This will cause increase demand on mostly diesel fuel because most of the world runs on diesel fuel and not gas. Therefore, diesel fuel prices will be pushed higher.

Now we can also through in currency and a weak U.S. dollar has on crude oil prices but we won't go there. We also won't go down the road that if we start to blend with more bio fuel in 2011 we won't need as much diesel fuel or that will lower diesel fuel prices.

Prepare for the worst and hope for the best. Start to prepare now by reviewing your fuel management program.

Here is a special 5 step plan to look at for your fleet management.

1. Does my fleet companies operation actually have a fuel management program?
2. Who does fuel audits from our fuel companies, fuel card and mobile fueling providers? Is it my fleet manger, fuel manager, clerk or no one?
3. Does my fleet fueling program have fuel savings with fueling discounts, fleet card rebates or could my company be paying to much on diesel fuel prices?
4. Within 5 minutes can I look up and see how many gallons of fleet fueling did 1 truck take over the last month or a branch or any information that would be useful?
5. When I think about my fuel management system, do I feel good or do I try to think of something else that will make me feel better?

If your answers to any of these fuel management solution questions, did not come back positive, do yourself and your company and favor. Take action now. Get fuel savings.

Happy New Year, Diesel Fuel Prices!

Glen Sokolis
President
Sokolis Group
Fuel Management & Fuel Consulting
Industry Expert
http://www.sokolisgroup.com
gsokolis@sokolisgroup.com

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Diesel Fuel Prices Up Again, Fleet Management Must Meet Challenge

Do we sound like a broken record now that diesel fuel prices have gone up nine straight weeks? Your fleet fueling costs may not have hurt as much as usual this week with only a.8 cent increase to .438 a gallon nationwide. But, how does it feel to know that diesel fuel prices are 65 cents higher than this time last year? Ouch. Listen fellow fueling cost watchers, the gloves are off! Where are your fleet fueling costs going to go? One word, okay, maybe it's more like several words, Egypt. Middle East. The increase in crude prices is already up a barrel since this new twist to your fleet management budget started to unravel on January 1, 2011.

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A week or so ago, you may have thought that your fuel management system might get back into shape because crude oil had gone down from to a barrel, and diesel prices would follow in the next few weeks. Hold your fleet fueling card tight. With crude oil back over as this article is being written, this might be the straw to push the 0 a barrel crude back into the picture. Ouch again.

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I know you sideline watchers give the old Eeyore. You think, "What can I do with my fuel cards and fleet cards to reduce fueling cost? My mobile fueling price is good. We have been using the same fuel companies for years they take care of us. I think I save." Well, to all that I say, sure, sure, sure --- get your head out of the Arab sand!

Let me ask you something else. When do fuel, fuel card, fleet card, mobile fueling and major oil companies make the most money? The answer: when fueling prices are higher! Why? Because, it is a lot easier to take a couple of cents a gallon on a product that is .50 than a product that is .75. Fuel card, fleet credit card services and fleet card companies make their money off of a percentage of the sale. Is it better for your fuel card company when fleet fueling prices are .50 or .75? Figure that depending on what fleet card(s) you are using, someone is getting paid 1.5% to 2.9% of the sale. Oh yes. What truck stop, mobile fueling company, or card lock company can afford to pay 2.9% of the total fueling sale and still remain in business? Maybe we should ask WEX. Yes, the same WEX (Wright Express) that provides you with all of those wonderful reports, and says that you need a fuel manager and two assistants to review the information because it's just a whole lot of information. I'm not here just to pick on WEX or Voyager. Fleet cards and fuel cards make more money on higher prices. Are your fleet management services going up too because the price of diesel is going up?

Listen, your company is busy working hard to make a splash in this tough economy with a fleet fueling market that is nuts. Ask yourself: Does your fleet manager or fuel manager really have the time to put together solid fleet management solutions that will create cost savings? Does the fleet manager or his staff have access to the right fueling data to know which way is up? Do you consider that you might have fuel theft going on? Well, you won't find out unless you put the right fuel management programs in place.

The time to take action to establish your fleet management and fuel management plan was months ago, but don't Eeyore it and put it off until diesel fuel prices reach .00. Take steps now. Hire a fleet management consultant to get your management systems in line, and make sure your fuel inventory management is working. A little invested now, will save a lot down the road. Trust me.

Diesel Fuel Prices Up Again, Fleet Management Must Meet Challenge

Glen Sokolis
President
Sokolis Group
Fuel Management & Fuel Consulting
Industry Expert
http://www.sokolisgroup.com
gsokolis@sokolisgroup.com

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Cheap Diesel Fuel Prices? A Distant Memory to Fuel Management

For as long as anyone can remember, until recently that is, diesel was always less expensive than gasoline which made things easy for fleet fuel managers. Why then have diesel fuel prices risen to the point of being higher than gasoline causing your fuel management upside down?

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There are many factors that have contributed to this significant price rise. Certainly the evolution of efficient, small and medium duty diesel engines has increased demand for diesel. The acceptability of diesel powered automobiles and light and medium duty trucks worldwide, with the exception of the United States, has increased demand for diesel fuel. The tide has changed from a gasoline powered world economy to a world economy powered by diesel fuel. Diesel powered cars in the U.S. have not been accepted as it has in other parts of the world, in particular Europe, even though these engines are more efficient that their gasoline powered cousins. This rejection in this country can be attributed to the fact that Detroit has never pursued the development of diesel power and have concentrated more on the development of hybrids and electric powered cars. This may be due in part to the debacle of the Cadillac diesel in the 80's that was a converted gasoline engine that was plagued with problems. Couple these factors with the higher price of diesel relative to gasoline and the public perceives that diesel power for everyday commuting is a no win proposition.

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Let us now take a look at another factor that contributes to the supply issue. We all hear about crude oil being sold in barrels. What exactly is a barrel of crude and what can be produced from that barrel? A barrel of oil is 42 gallons of crude. As this 42 gallon barrel is refined into usable product, 19.5 gallons of gasoline is refined as opposed to only about 9 gallons of distillate which includes both diesel fuel and heating oil. The balance of volume includes jet fuel, kerosene, asphalt, lubricants among other products. Now we can really see how all these factors influence the rise in the cost of fleet fuel.

All things considered the diesel fuel price rise could have been worse. However, between 2002 and 2007 the U.S. refining industry tried to keep pace with the shift in product demand by increasing the net production of distillate fuels by domestic refiners by 15 percent and at the same time increased production of diesel fuel by more than 33 percent. This surely helped contain the price of diesel fuel somewhat.

So what does the future hold for diesel fuel prices? It is doubtful that we will ever see diesel prices fall behind those of gasoline considering all of the influencing factors stated above. World demand will only continue to increase and they can only squeeze so much diesel fuel from a barrel of crude. Government mandates for increased use of bio blends will also contribute to continued high and higher diesel fuel prices in the foreseeable future. We can only hope that our fuel management systems can help with higher prices.

Cheap Diesel Fuel Prices? A Distant Memory to Fuel Management

Glen Sokolis
President
Sokolis Group
Fuel Management & Fuel Consulting
Industry Expert
http://www.sokolisgroup.com
gsokolis@sokolisgroup.com

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