Diesel prices have gone up for 11 straight weeks for a cumulative 37.2 cent gain, a 70-cent increase from last year. Current diesel prices have already risen 2.1 cents this week to $3.534 per gallon, according to the Department of Energy’s Energy Information Administration (EIA). This week’s price is the 20th consecutive week prices have been at $3 per gallon or more. Current diesel prices are at their highest level since peaking at $3.659 during the week of October 13, 2008.
Even though oil prices have decreased slightly in recent weeks, some experts are saying that the price per gallon of diesel and regular gasoline could approach the $4 per gallon level, due to higher global demand for oil and the coldest winter in recorded history in many parts of the United States and Europe.
Fuel typically makes up about one-third of trucking companies’ budgets, said Kristen Monaco, an economics professor who specializes in trucking at California State University, Long Beach. However, when diesel prices get this high, the cost of fuel is the number one expense for trucking companies.
Due to the economic recession, most trucking companies are already suffering from razor-thin margins. Many are struggling just to survive. Because most trucks average only 7 MPG, fuel expenses can really add up fast.
Why are fuel prices so high? Diesel prices, like gasoline prices, are driven by the ever-increasing price of crude oil. There’s several reasons prices are so high. Many are calling it the “perfect storm” for increased fuel prices. Here a few of the many contributing factors:
1. Global demand for oil is incredibly high due to incredible growth in China and India.
2. Extremely cold winter weather in most of the US and Europe, has increased the demand for heating oil, which can cause an increase in fuel prices.
3. OPEC continues to restrict supply, putting even more pressure on fuel prices.
4. The BP oil spill resulted in reduced drilling offshore in the Gulf Coast, causing an increase in fuel prices.
5. Economic turmoil in the Middle East is adding pressure. Even though oil is not produced in places like Egypt, the oil travels there, which has been severe;y restricted in recent weeks.
How Trucking Companies Can Survive Despite Rising Diesel Fuel Prices
With gas prices this high, it makes sense for trucking companies to invest in a GPS fleet tracking system. Tracking and managing fleet vehicles can significantly reduce fuel expenses. The Aberdeen Group, an independent research firm, concluded that a GPS fleet tracking system can reduce fuel costs by 13.2% on average.
Lower fleet fuel bills means higher net profits. A GPS fleet tracking system has proven time and time again to reduce fuel costs. For example, if a truck fleet of 25 vehicles reduced idling time by only 15 minutes per day, it could easily result in fuel savings of 562.5 gallons – reducing costs by roughly $1,986 per year at current diesel gas prices. If you reduce idling time by 60 minutes, it would result in a fuel savings of 2,250 gallons at a cost of almost $8,000 per year!
FieldLogix GPS Fleet Management System can reduce vehicle fuel costs low by:
- Reducing excessive vehicle idling
- Reducing excessive vehicle speeding
- Improving the routing of vehicles
- Eliminating excessive personal use of fleet vehicles
- Improving vehicle maintenance
- Ensuring that vehicles do not leave designated areas
- Eliminating side jobs
For more information, please check out the FieldLogix Demo Videos.