Fuel Costs Climb

Fuel Management Statements in today’s news and our comments to them in Bold

Oil prices held above $67 a barrel Friday, adding to gains made overnight, as world stock markets rallied on signs of improvement in the U.S. economy.

Ok, the U.S. economy might be improving. Companies are reporting better than expected earnings but earnings are still not as good as most previous earnings and revenues for most companies are down. Pointing more toward wage cuts than actual growth.

By midday in Europe, benchmark crude for September delivery was up 11 cents to $67.27 a barrel in electronic trading on the New York Mercantile Exchange. On Thursday, the contract added $1.76 to settle at $67.16.

Evidence that the recession-hit U.S. economy is strengthening has bolstered investor optimism and triggered a rally from $58.78 a barrel two weeks ago. While crude demand hasn’t rebounded yet, traders have begun to have more faith that consumption will eventually pick up.

Yo-Yo ride. The oil market has gone up and down like this over the last couple of months. In fuel management you learn to control the controllable. Things like margins from your fuel vendors and where your drivers fuel their trucks.

“We haven’t seen demand increase yet, but all the good news about the economy seems to be adding fuel to the fire,” said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. “Just the fact that things are improving is enough to change the sentiment of a lot of people.”

Why would demand be increasing for gas or diesel fuel? The American people have changed their driving habits, some don’t even have any where to drive since they are unemployed. So your not going to see gas demand increase anytime soon.

For diesel fuel demand to go up, you need fleet fuel of trucks on the road delivering products. As revenues for U.S companies came out this week, we can see that has not occurred. No increase in trucks to deliver products, no increase in diesel fuel demand. Again, manage what you can with your fuel cost, manage your fuel expenses through a solid fuel management and fuel consulting program.

“I wouldn’t say the current fundamentals support oil at $65 to $70,” Rigby said. “A lot of countries aren’t out of the woods yet.”

“It’s putting the cart before the horse, but that’s what the market does.”
Rigby said he expected oil to rise over the next few weeks and test an eight-month high of $73.23 a barrel reached on June 30.

This is a guy that I believe knows what he is talking about with fuel costs. Fleet fuel demand, gas prices, diesel fuel cost don’t support where we are right now. Perhaps in a few months they will, even more reason to get your fuel management under control now.

Lastly, as a fuel management and fuel consulting company we always try to help our clients and potential clients buy diesel fuel and gas the best they can. Fuel management is very important if you want to control your fuel costs. As the U.S. economy improves fuel costs will go higher. Will your supplier margins go higher? You probably won’t know unless you have a team of fuel experts on your side watching your fuel management.

Sokolis is a fuel management and fuel consulting company. We save companies tens of thousands of dollars a year by lowering their fuel cost through lowering the fuel margins they pay. Sokolis can be reached at 267-482-6155 or www.sokolisgroup.com. Fuel management at its finest.