Posted by Jack Lee
Tue, 07/21/2009 - 10:58
10 Ways to Cut Summer Fuel Costs
It’s summer and as predictable as bar-b-ques and family vacations gas prices are creeping up. It seems the price at the pump increases with demand and for gas-reliant companies this can be as painful as a sunburn. We asked our resident “Gas Guy”, Bob Van Der Valk about summer gas prices and he gave us some insight.
Bob reports, “In the short term prices will continue to go up another 25 cents per gallon between now and middle of August. After Labor Day prices will ebb down slowly and by Thanksgiving go back down to about where they were last year at the same time.”
He tells us, “This past spring brought forth a renewal for oil refinery profits. This was in the form of increased demand for gasoline after dismal first quarter results in 2009. And now the oil companies are looking forward to those summer breezes peeking just around the corner. Prices have fluctuated, but expect them to be on the rise, even though the price of crude has dropped. The reason is blowing in the wind… In this case the oil companies are stocking up in case those summer breezes change into hurricanes.”
So be prepared. And to help here are TEN WAYS to help cut those high summer fuel costs for your company:
1. Train and educate your drivers: It starts with the people who have their foot on the gas pedal. Your drivers can control fuel consumption each time they fire up their engines, and proper training can improve fuel efficiency, economy and emissions. Hard acceleration, speeding and idling are the biggest causes of fuel waste. Initiate a training course for drivers and reward participation.
2. Decrease Idling: Be aware of the time engines idle. We can’t leave machinery and equipment running all day long. Stop your engines! Excessive idling adds to your fuel costs by as much as 50% and can shorten the life of engine oil by 75%, adding more costs. Initiate a campaign to reduce idling time and reward participants. Allowing an engine to idle more than 3 minutes causes expensive damage which harms efficiency, shortens engine life and increases maintenance costs. It all adds up.
3. Start off slower: This is another lesson your drivers must be taught. Jackrabbit starts waste fuel and save less than 3 minutes per hour driving, but can result in using 40% more fuel and increase toxic emissions by 400%! What’s the rush? Ease up on the gas pedal and your efficiencies will improve.
4. Slow down: Speeding is dangerous, it wastes fuel and creates higher levels of toxic emissions. Speeds over 100 km/hour drastically impact fuel efficiencies – cars travelling at 120 km/hour use 20% more fuel. Trucks travelling at 120 km/hour use 50% more fuel and they also emit 100% more carbon monoxide, 50% more hydrocarbons and 31% more nitrogen oxides.
5. Lose Weight: Excess weight places unnecessary strain on your vehicle’s engine and greatly affects its fuel efficiency. By removing as little as 100 pounds you can significantly improve your gas mileage. Check each vehicle and pitch out that unnecessary weight!
6. Use a Fuel Management System: This is the most powerful way to lower fuel costs and increase productivity. Available systems range from basic onsite refuelling (which saves up to 20 minutes in wasted time and fuel each fill, per vehicle) to automated fuel tracking (which details every litre pumped into every vehicle by date, time, quantity and fuel type) to telematics (which measures overall fuel efficiency, vehicle performance, tracks fuel waste due to idling, speeding, etc. and identifies critical areas to improve efficiency and reduce fuel costs and emissions.) The technology exists so you can become a Fuel Manager and stay on top of your fuel consumption, one vehicle at a time. It can work for you.
7. Upgrade your Fleet: Whenever possible, invest in modern, fuel-efficient vehicles. Modern diesel engines are far more fuel-efficient and perform better with modern diesel fuels such as ultra low sulphur diesel and biodiesel. Though it may seem expensive, new diesel vehicles can save thousands of dollars in maintenance, fuel and productivity per vehicle. Measure each piece of equipment for fuel efficiency and get rid of the bad ones! Replace and upgrade your equipment regularly. It may hurt now but it will pay you back.
8. Tune-up vehicles regularly: Do you have a stringent, well-managed maintenance policy? Many companies “fix it when it breaks.” This attitude costs too much in wasted fuel. A well maintained vehicle performs better, improves fuel efficiency, reduces toxic emissions and, in the long run, will cost less to maintain.
9. Pump it up: Proper tire inflation improves gas mileage. At 4Refuel our statistics show improperly inflated tires can cost up to 2 weeks worth of fuel per year! How big is your fleet? Two weeks per year per vehicle adds up to thousands of dollars in lost profits! In addition proper inflation results in improved vehicle and braking performance, and increases tire life.
10. Implement Total Fuel Management Technology: Wow, that’s a mouth full! You can measure and manage your fleet better when you have the right information. Tracking miles traveled, average speed and engine efficiency is critical to cutting fuel costs. This information will help your drivers and managers optimize routes with better planning. Mapping software and GPS will eliminate thousands of unnecessary miles per week. Less time on the road means less fuel consumed, less wear on vehicles, decreased expenditures and overall increased productivity, plus lower toxic emissions!
Now that you won’t get burned by increasing gas prices don’t forget the sunscreen! Have a great summer!
Jack Lee,
President/CEO
4Refuel Inc.
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Trend for Diesel Fuel Prices in Canada and the US
With relatively low diesel prices and anemic demand, fleets and shippers may get lulled into a false sense of security about their fuel costs.
Although the average ultra-low-sulfur diesel (ULSD) spot price in the U.S. for June was an astonishing $2.03/gal cheaper than one year ago, at $1.82/gal it is a whopping 43cts/gal higher than the average just six months ago.
The same goes for Canada where prices have increased exponentially to the US diesel fuel prices. M.J.Ervin reports that the diesel fuel prices in Canada averaged 88 cents per litre as of 7-29-2009.
The trend for the next month is up but will then ease up after August.
What causes the need for these initiatives?
The factors that affect diesel fuel prices seem complex, but an understanding of the basic principles can empower the individual consumer to make the right decisions.
Rising diesel fuel prices can translate to increasing costs of products and services. In order to know what can be done to slow down this increase, you as a consumer need to be aware of its causes and find creative ways to save money on your fuel usage.
Given a barrel of crude is 42 gallons; the average refinery is able to produce about 8 gallons of diesel and jet fuel or 20 % of the total. About half of the barrel is made into gasoline with the remainder in low end bunker fuel oils and other petroleum products. Refining accounts for nearly fifteen percent of diesel fuel cost.
The remaining elements of the cost of diesel fuel are government taxes and the expense of advertising and delivery. A ten percent excise tax is levied onto all fuel products that are refined in Canada. Although foreign fuel can avoid this tax, it is generally cheaper to buy locally refined fuel as import taxes generally are passed along to the consumer.
Saving fuel and lowering consumption is not only good for the environment; it decreases demand, and ultimately your cost.
Bob van der Valk
Fuel Pricing Expert
"the Gas Guy"
Diesel prices will be affected by regulating commodities trading
The US and Canadian energy futures market has been one more tool to help control fuel costs or lock in prices for end users such as big trucking companies and airlines. For others, such as financial firms, it’s been just one more way to make money.
That will soon change with the US Commodity Futures Trading Commission considering stricter regulations on speculators in the energy futures markets.
"I believe that the CFTC has a duty to protect the American public from fraud, manipulation and excessive speculation," said the commission’s chairman, Gary Gensler, during public hearings on futures trading last week. "Thus, it should be the CFTC that sets position limits on energy market participants."
In the past 10 years, more and more energy futures contracts have been written and traded.
The annual volume of all energy futures on the New York Mercantile Exchange grew more than 450 percent between 1998 and 2008.
After the roller-coaster ride of 2008 in the price of crude oil, experts say it is likely that the commission will put limits on nonproducers and nonconsumers of energy products.
This is already having an immediate impact on prices paid for fuel in the US and Canada. The big investors will soon be unable to gamble on energy futures without disclosing their positions.
The old way of trading in energy futures had the big investment banks take huge positions in the market. They thereby were able to have an influence on driving the price of fuel either up or down we paid at the pump without them ever having to take delivery of any wet barrels.
Bob van der Valk
Fuel Pricing Expert
"the Gas Guy"
Prepare for a drop in diesel and gasoline prices
Currently diesel fuel is cheaper than gasoline in Canada and vice versa in the US. Canadian truckers, who were paying $1.45 per litre in June 2008, are now just paying 92.5 cents in the first week of September per the M.J. Ervin & Associates weekly petroleum prices survey. That’s a whopping 36% savings in 15 months.
Gasoline prices also dropped drastically in the same time period from $1.35 per litre from June last year to .994 cents per litre in the first week of September 2009. That is complete reversal from paying 10 cents per litre more for diesel to paying almost 7 cents per litre more for gasoline last week.
According to Statistics Canada, in July 2009, six of the seven major petroleum products posted declines compared with the same month a year earlier. The decrease in total product sales was led by diesel fuel, down 314.7 thousand cubic metres (-12.5%). Motor gasoline was the only product in the major petroleum product group to post higher sales, up 158.9 thousand cubic metres (+4.3%) from July 2008, and the fifth consecutive month-over-month increase in motor gasoline sales.
Fall is here and with that refineries usually switch to maximize heating oil production for the coming winter. With trucker demand down prices will start decreasing at levels seen during the winter of 2008-2009.