As soaring oil prices impact the profitability of transportation fleets around the globe, trucking and construction businesses are trying to improve efficiency any way they can. Fuel costs are among a fleet’s most substantial line items, right up there with labor, equipment, and maintenance. In construction, where fuel is a critical component of the building process, firms have felt the impact of rising prices as much as anyone.
In this article, we look at what’s driving the fuel crisis and how Motive can help you improve fleet profitability right now.
A perfect storm of factors has caused oil prices to skyrocket
In July, domestic crude oil prices stood at $99 a barrel, trending downward by about 8%. It’s the first time U.S. oil prices have dropped below $100 a barrel since May. While that may sound like welcome news for fleets that have worked hard to cut expenses and waste, some fear it’s a sign of a looming recession.
According to the New York Times, trends in crude oil prices are the biggest driver of soaring fuel costs. Estimates from the Energy Information Administration show that in May, the cost of crude oil accounted for 47% of the price of a gallon of diesel fuel.
While the United States is the world’s largest producer of oil and processed petroleum products, we’re exporting more than 1 million gallons of diesel a day to Latin America and Europe as a result of the Ukraine war, Transport Topics reports.
Since the start of the war, Russia, the world’s second-largest oil producer, has exported less oil in response to U.S. and E.U. sanctions. The cut in international supply has pushed fuel prices higher, and oil-rich nations in the Middle East can’t produce supply fast enough.
In the United States, at least 13 oil refineries have shut down on the East and West Coasts or have cut production since the start of the pandemic, hindering capacity to refine oil into diesel and gasoline. Meanwhile, domestic oil producers with an eye toward an electric future hesitate to ramp up production for fear of losing financially in the long run.
Lower fuel costs with the help of technology
Fortunately, there are a few steps fleet managers can take right away to reduce emissions and stay profitable. Learn about tools and get tips to stay ahead of the game in Motive’s upcoming webinar, Cutting fuel costs with the help of technology. In this webinar, we’ll cover:
- How to reduce fuel consumption through route optimization
- The best fuel-saving technologies and tips
- How to use driver scorecards to promote fuel efficiency
- How to save at the pump with out-of-the-box innovations
- Fuel-saving trends on the horizon