Rising fuel costs have placed a strain on everyone’s wallet. From the everyday commuter to large corporations, the impacts of increasing fuel prices are being felt across the nation. However, few people have been impacted by the rising cost of fuel as much as small business owners.
Whether your fleet of vehicles uses diesel fuel or gasoline, you’re undoubtedly paying more at the pump, which means you’re seeing increased operating costs and smaller profit margins. Unfortunately, it appears that the average price per gallon will continue to rise throughout the remainder of the year.
The good news is you can navigate the challenges of rising fuel costs by taking a proactive approach. Join us as we provide some actionable tips for contending with high gas prices. We’ll also cover the following:
Causes of rising fuel costs
Various factors impact the retail cost of fuel, including crude oil supplies, gasoline demand, geopolitical events, and even the weather.
The ongoing conflict between Russia and Ukraine is having a direct impact on both global oil production and fuel consumption. Several nations, including the U.S., have imposed sanctions against Russia, further driving up fuel costs.
However, geopolitical events are just one of the factors at play. Inflation also has a direct connection with oil prices. Generally, when oil prices rise, so does the cost of goods, and vice versa.A third condition that’s causing regular gasoline prices to soar is global temperatures. In the midst of a heat wave like the one the U.S. is currently experiencing, oil refineries can’t operate at full capacity.
Why are gasoline prices rising?
Gasoline is produced using crude oil. When the crude oil supply decreases or oil prices rise, the cost of all petroleum-based products—including gas—goes up as well.
Since oil refineries can’t operate at full capacity during periods of extreme heat, they’re currently struggling to keep up with the demand for gas and diesel fuel. Due to the basic laws of supply and demand, reduced product availability always leads to price increases.
Why are oil prices going up?
Oil prices are rising for several reasons.
First, Russia, one of the world’s biggest purveyors of oil, has cut back on production and still faces sanctions for its role in the ongoing conflict with Ukraine. Saudi Arabia, another major oil producer, has also scaled back production, resulting in higher prices.
Will gas get to $7?
Fortunately, most areas will not see gas retail prices climb above $4 per gallon. However, if you’re in L.A., San Francisco, or another area with high regular gasoline prices, you may see costs as high as $7 per gallon.
Does rising gas prices cause inflation?
Rising gas prices can certainly contribute to inflation. When gas and diesel fuel costs go up, distributors, manufacturers, and suppliers have to spend more to deliver goods. While most businesses absorb some of these costs themselves, fuel expenses are often passed on to the consumer.
In this sense, gas prices can cause or worsen inflation.
Innovative solutions to combat rising fuel costs
If you aren’t tracking it you can’t measure it.
One of the best ways to combat rising fuel costs is to install fleet-tracking technology in your vehicles, which can monitor everything from vehicle location to miles driven. With a solution like Force Fleet Tracking, you can even monitor idling time to proactively reduce fuel consumption across your entire fleet. After all, the main ways that fleets can reduce fuel costs is by addressing idling—low-hanging fruit that can make a significant impact. Force Fleet Tracking’s idling reports gives you the data you need to identify unnecessary idling and correct it.
Once your monitoring technology is in place, you can track concerning trends like speeding or rapid acceleration. These behaviors not only put your assets at risk but also burn more fuel. You can address such issues with your drivers before they get in an accident or generate hundreds of dollars in fuel waste.
Curious about the financial impact of fleet tracking? Dive into our comprehensive article to find out how much your business cloud saves with this innovative solution.
Take advantage of gas tax holidays
Many states run gas tax holidays, during which they suspend state-level fuel taxes. You stand to save a significant amount of money on these holidays.
Depending on the state you reside in, you may be able to save upwards of $0.50 per gallon during a gas tax holiday. If you know your state is running a gas tax holiday, make it a point to fill up your entire fleet.
Monitor driver behavior
Driver behavior has a direct impact on fuel efficiency and the overall longevity of your vehicles. Keeping a close eye on your drivers, their habits, and fuel consumption trends can help you pinpoint sources of waste.
Ryan Hill, product manager at Force Fleet Tracking says that adopting fleet tracking technology like Force Fleet Tracking’s RoadscoreTM makes monitoring driving behavior that much easier. RoadscoreTM accurately quantifies drivers’ real-world behaviour out of 100 for every trip.
“Rapid acceleration burns more fuel. You can keep an eye on these poor habits by examining a driver’s RoadScoreTM— the higher it is, the more efficiently they’re driving because they’re not harshly accelerating and braking.”
You can also determine whether drivers are going over the posted speed limit with driver behavior reports.
“If a driver consistently exceeds the posted speed limit by as little as 10 mph, they are causing you to spend more on fuel than you need to,” Hill explains.
Speeding and harsh braking also expose your company to unnecessary risk, as they are more likely to be involved in an accident. Even if drivers are fortunate enough to avoid collisions, they are placing a lot of undue stress on your vehicles, which means extra repair expenses and shortened lifespans.
Looking for efficient ways to manage your fleet’s fuel costs? Our guide provides practical, impactful steps to help reduce your business’s expenses.
Government policies and initiatives
The Energy Information Administration provides short- and long-term energy outlook data and keeps Americans in the loop about fuel prices. In its July 2023 short-term energy outlook, the EIA estimated that crude oil prices will increase throughout the remainder of the year and continue rising through Q1 of 2024.
Fortunately, the United States government is taking action to help keep fuel costs down. States are also doing their part to alleviate the burden of rising fuel costs. Specifically, federal and state governments are leveraging three key tactics:
- Supply Increase: The Biden administration is working to increase U.S. gasoline supply by leasing public lands for drilling and releasing fuel from the Strategic Petroleum Reserve
- Gas Tax Holidays: Many states are reducing or suspending gas taxes to decrease the per-gallon cost of gasoline and diesel fuel
- Price Caps: The U.S. has relied on price caps since the 1970s — these caps mitigate some of the price fluctuations associated with changes in gasoline supply
The three strategies outlined above are helping save Americans money at the pump. However, as a small business owner, you must also do your part if you want to maintain healthy profit margins and weather this price surge.
Due to ongoing economic, geopolitical, and environmental uncertainty, many analysts haven’t published updated long-term assessments of future fuel prices. But the general consensus is mostly positive, and many experts predict that gasoline prices will remain under the $4-per-gallon threshold for most of the nation.
In the meantime, you still need to do your part to keep your fuel expenses in check.
Force Fleet Tracking can play a vital role in your cost-management strategy by providing you with affordable, reliable fleet-tracking software. With Force, you can reduce idle times, monitor driver behavior, and keep the wheels turning on your small business fleet.