The current fuel price – is it secure?

As an operator you can celebrate the relatively constant wholesale diesel price of 2015. However, this hides an issue of great concern. Currently the cost of Brent crude has decreased by 52 percent to US$ 29,97 in 12 months, yet Gauteng’s diesel wholesale price has increased by 8,5 percent in the same period.

This clearly demonstrates the impact of the depreciating rand and increased taxes. However, the medium-term risks facing operators are significant.

Without entering into a detailed economic debate, we know that the oil price is driven by supply and demand and has seen a peak of US$ 128,40 in the last five years, and an average price of US$ 86,51 over the past ten years. This is 2,9 times today’s price.

This suggests that, in the medium term, should oil move back toward the average, we must anticipate the risk of a significant increase in fuel prices. Perhaps then, during this “honeymoon period”, risk offsets should be initiated.

Currently, the cost of fuel represents 40 to 60 percent of the total cost of vehicle ownership and any increase will be significant. What should be the strategy to reduce this risk and cost?

• Buy fuel-efficient vehicles;
• Right size your fleet;
• Apply best fuel management practices;
• Use telematics systems for route planning and utilisation management;
• Reduce idling times and wasted kilometres;
• Train your drivers.

Visit www.fleetsolutions.co.za for suppliers who are able to provide solutions for fuel management, telematics and consultancy services to reduce your cost of ownership.