Fuel costs - historic analysis and projections for 2018
When taking into consideration historic analysis and projections for fuel in the UK, there are two critical components that must be developed: gas production and overall price, as the combination of the two, will help to make the most informed decisions for a fleet manager.
A recent study published by Statista, demonstrated the forecasted price of gas in the United Kingdom to have a gradual increase year-over-year for the next 4-to-5-year period. The increase is from the initial price point of 34.6 pence per therm to a final price point of 47.5 pence per therm within the given time period. Additionally, the focus of the study included the perception of gas production levels falling at the same time frame, by over 3.3 billion therms. As the laws of supply and demand remind us, the effect on the availability of a particular product, in this case, petrol, and the desire and demand from businesses and consumers, alike, have a direct correlation on its price. As supply is set to decrease over the coming year and beyond, with equal or greater demand, the value of a litre of petrol is sure to rise.
As prices of fuel rise in the coming year, and potentially for several years ahead, the importance of efficiency in fleet vehicles becomes exponentially greater. With fleet vehicle technology capable of providing GPS locations for each vehicle within the fleet, with planned and organised routes, a fleet manager can become fuel-conscious when planning daily routes and be determining the optimal plan to ensure decreased costs on the fuel spectrum. As prices increase in fuel across the UK for one business, the same impact will be maintained across all competitors in the industry, making it critically more important to focus on the details that develop comparative advantage, such as the optimisation via fleet-based technology.
Another study, published by the Energy Collective, illustrated a similar perspective as the study published by Statista within the past quarter. In addition to a balance of supply and demand from the perspective of standard occurrences, additional factors such as politics have played a significant part in the balance of fuel costs as we move further into 2018. With the US lifting a ban on energy exports, there has been increased pressure on OPEC/Russian production, as well as Middle East politics playing a game of “catch up” from historic lows demonstrated in 2015 for fuel exports. The delicate balance of “fuel politics” in an economic structure that can already vary significantly based on supply and demand trends, as well as renewable energy trends increasing on a global level, have demonstrated to the business fleets around the UK to be conscious of decisions that could help to influence fuel-based cost reduction.
Fluctuations in fuel cost will remain constant in this year and beyond, helping to define how important strategic initiatives toward business fleet management and available technology truly is when creating a sustainable success model for a business driven by the fleet.