Managing risk and costs during record fuel prices

Posted on: 13 June 2018

What’s happening?

We all know that the price of crude oil is a constant economic hot potato.  Following continued rises in the price of oil, fuel prices are at their highest levels for over two years.

Not only this, prices jumped at their fastest rate in 18 years during May, up to an average of 129p for petrol and 133p diesel per litre1. The rises were driven by a combination of things: a jump in oil price, the weakening pound against the dollar and the Organisation of the Petroleum Exporting Countries (Opec) restricting supply last time the price of oil fell1.
 

How can businesses mitigate the impact

Although all drivers and businesses will feel the bite of more expensive fuel on their wallets, there are some mitigating opportunities.

Businesses can look to maximise the potential benefits from the use of their vehicles, by reducing mileage driven and or driving more economically. By taking these into account more, it could also help fuel a reduction in road incidents, which will help control or even reduce future insurance costs. Fewer accidents could also translate into less downtime for business and fewer (potentially) costly claims.

As well as this, driving more economically will help businesses reduce their impact on the environment by producing less CO2.

Businesses and fleet managers can instil a culture of driving more economically among drivers by ensuring they have a robust driving policy in place, by measuring their performance (e.g. using data from a telematics device or in vehicle technology such as Lightfoot), and supporting drivers through interventions (e.g. driver training). An additional option could be to put incentive schemes in place to further encourage drivers to drive more economically.

There are many ways to drive more efficiently to reduce fuel consumption. For example, going 10mph slower could save as much as 10% of fuel, according to the Department of Transport2. So simply slowing down can make a difference.

It all comes back to better management of risk. The hot potato of fuel prices constantly fluctuates, but knowing how these fluctuations could affect your business on an ongoing basis is key – and it might just improve fuel consumption and road safety at the same time.

 

1 ‘Hellish’: UK motorists hit by biggest petrol price rise in 18 years – Financial Times
2 Cut your speed, cut your petrol bill – The Guardian