Rising fuel prices are not a fleeting concern

As fuel prices begin to inch back up, energy firms will feel the pinch operational costs as well as retail margins says Jenny Powley.

Falling wholesale energy prices have been good news for gas and electricity suppliers in recent months. But with prices creeping back up, it’s not just margins that will be feeling the squeeze. Day-to-day operations – like running a fleet of vehicles – are quickly becoming more expensive.

Despite the fact that pump prices remain well below what they were twelve months ago, they are now averaging at around 116p/litre for petrol, up from a 12-month low of around 106p in late January. Fuel prices in the UK are poised to climb further after the International Energy Agency upgraded its forecast for oil demand to 94 million barrels per day in 2015.

With prices rising, it’s more important than ever – especially for industry’s with large field forces, like utilities – to run an efficient fleet of vehicles. This means helping drivers to become more aware of poor driving habits and minimising unnecessary journeys.

In research conducted as part of the RAC’s annual Report on Motoring, we found that two thirds (66 per cent) of company vehicle drivers said they monitored the fuel consumption of their vehicle, compared to less than half (44 per cent) of private vehicle owners.

There are a number of factors behind this statistic which all lead company vehicle drivers to think about fuel consumption and better fuel management. For instance, in most cases drivers have to reimburse fuel usage for journeys classified as private, which will encourage them to keep costs down by filling up at the lowest cost retailers such as supermarkets.

This benefits the driver as they have less to reimburse, as well as the business as they are using the cheapest possible fuel, driving down costs. Using fuel cards, which are mainly only accepted at supermarkets, also gives managers much more reliable information about fuel consumption across their group of vehicles.

But aside from fuel prices, which are subject to price changes and market forces, there are other ways businesses can operate their vans and vehicles more efficiently.

Telematics technology, which is now increasingly used by utility companies of all sizes, provides firms with real-time information about the location, movements, status and behaviour of a vehicle using GPS systems. Despite it being the size of a matchbox, telematics provides a whole range of data that can help with vehicle maintenance, driver management, fuel management, health and safety management and dynamic vehicle scheduling. For example, the RAC Telematics ‘driver score’ function can be used by firms to save up to 15% on annual fuel bills as it allows managers to monitor how efficiently their vehicles are being driven.

The future of effective and sustainable fleet management lies, in part, in the increased use of technology. Over the coming years providers will launch more sophisticated technology that helps businesses understand their drivers’ behaviour even better so that they can advise on ways to improve fuel efficiency and reduce costs.

In the meantime, instilling good habits to minimise fuel spend will also help to soften the blow of fuel price rises and efficient driving, leading to  reduced carbon emissions. This will impact not only the environment, but also the business bottom line.