Yes, diesel fuel prices have gone up 12 straight weeks and will probably go up several more weeks but what has caused this? We all know that it has been a very cold winter, so we have had a diesel fuel supply issue to start. Out of a barrel of crude oil, it only produces 25% of heating oil or diesel fuel. Basically, there is a competition between heating homes of fleet fueling for trucks. Internal supply and demand issues for the same product battling for pipeline space, storage space, etc.
The real move on your diesel fuel prices is the Middle East. As a fleet manager there are a lot of unknowns that you deal with in fleet management. What are tires going to cost, lubes, diesel fuel prices, new engines and everything else that might fall under your fleet management system. When it comes to the fleet fuel that is running your fleet companies vehicles the price is going wild because everyone is running scared. If fleet managers ran as scared as some of these fuel traders your company might think that you were crazy.
First Egypt made fuel savings hard to come by because fueling prices rose. Egypt barely produces any oil but it’s the Middle East. One of the hottest hot beds in the World and 50% of oil is produced there. When Egypt was successful over throwing its leader, Libya decides its high time for them to overthrow there leader (I would agree). That is when the hysteria kicked in. Libya mind you, only produces 2% of the World’s Oil but the fear factor that this could spread to other countries still makes oil traders jumpy.
The 2% of Libya oil that is lost and its probably only lost temporarily can be made up by Saudi Arabia. Saudi Arabia is sitting on a lot of extra crude to replace Libya.
Hopefully, in a short period of time, things will resume back to being “normal in the Middle East” and we can see fleet fueling prices come back down to reasonable levels. This will allow you fleet management budget to recover from the heartache it has felt so far this year.