Fuel Efficiency: Keep your top cost under control and you on top
January 1, 2002
Without a doubt the largest operating cost any owner/operator will incur these days is that of fuel.Even with the recent downturn in prices, fuel is still a significant cost. In fact it is not uncommo...
Without a doubt the largest operating cost any owner/operator will incur these days is that of fuel.
Even with the recent downturn in prices, fuel is still a significant cost. In fact it is not uncommon for fuel costs to eat up anywhere between 30 to 50 per cent of an O/O’s operating budget, depending on the application.
Aside from monitoring the manner in which you drive by keeping a constant vigil on your speed and horsepower draw; there are a number of other factors that can affect overall fuel costs.
Pump price is by far the largest single item affecting your bottom line. With most of the fuelling in Canada taking place at cardlock facilities, the pump price is rarely posted. However, many carriers use more than one oil company, so it is not uncommon for there to be drastic price differences between suppliers, even in the same town.
Fortunately, all fuel suppliers send a price list along to their respective customers at the beginning of the week and thus these lists can be reviewed to determine the cheapest place to fuel.
I personally have seen as much as a five-cent-a-litre difference between suppliers that are just across town from one another.
It is also important you not only keep an eye on the pump, but also on your carrier. Some carriers may add an “administration fee” to your fuel bill for using their cards. If your contract clearly states your company will add a certain amount on every litre, and you have signed this contract, then you are aware of your costs.
However, it is important to compare notes with your fellow truckers. If your buddy is running for a fleet with 10 trucks and is getting a better deal than you on fuel, even though your company has 100 trucks, then I would start to ask some tough questions.
Unfortunately, it is a common practice among some carriers to negotiate a low fuel price and then turn around and “sell” fuel to their O/O’s at an inflated price without ever informing you about their deal with the oil company.
Thus, your trusted, friendly carrier keeps the difference adding thousands of dollars to your annual fuel bill, while significantly improving its own bottom line. It can be the old story of the rich getting richer and the poor, well, poorer.
Most reputable companies, however, will provide O/O’s with a weekly price list for the various cards they have issued – along with listings for individual facilities. If your carrier does not, pressure them into doing so, or go and get your own fuel cards.
The second most significant item impacting your overall fuel costs is where you purchase your fuel; I am not talking about different suppliers, but rather different jurisdictions.
There are many intricacies within the fuel tax system, but fuel tax calculations are based on your total miles within a jurisdiction divided by your average MPG. Or in other words, the amount of fuel that should have been used in that specific jurisdiction.
This figure, in turn, is compared to your total fuel purchases in that jurisdiction to determine whether you owe taxes or are entitled to a refund or credit.
Without getting into fancy calculations, I’ll illustrate my point as best I can with a simple example. Let’s say you are on a regular run from Calgary to Winnipeg. Three jurisdictions, with three different fuel tax rates. Saskatchewan currently has a very high fuel tax rate, whereas Alberta and Manitoba are much lower.
You would be wise to purchase all your fuel in the latter two, where you will not only get a much better pump price but also a refund on your fuel taxes. Another way to look at it is in Alberta and Manitoba, you will have purchased more fuel than was necessary to get the job done in those jurisdictions. And in turn they will refund the “unused” fuel tax to you. This refund, coupled with the lower pump prices, will more than cover your fuel tax cost in Saskatchewan, potentially saving you hundreds.
Lastly, another cost are the transaction fees some oil companies add onto fuel purchases, which become especially apparent when fueling in the U.S.
Most fees run from a buck to US$3 although they are often subject to negotiation. If you fuel once a day and pay a $3 transaction fee, you’re obviously paying significantly more than your fellow O/O who is fueling every two days at $1.
As well, pay attention to the perks that come with fueling. If you get a free shower and a cup of coffee with a fuel purchase at truck stop A, and truck stop B down the street has a comparable price yet gives you nothing extra … where do you think you should buy your diesel?
– Dave Holleman is an over-the-road owner/operator and can be reached at email@example.com.
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