I had to chuckle every time that I walked by the Powerball signs last week that couldn’t display full $1,500,000,000 jackpot because the signs have just 3 digits to show the number in millions.
This past weekend, there was the opposite situation in Houghton Lake, Michigan where they didn’t need the dollar digit when the price of regular unleaded gasoline briefly fell to 47¢ per gallon. Wow.
Gas prices are the lowest across the US that they’ve been in some time — even outside this extreme example. It presents an interesting question to field service companies about how to forecast their 2016 fuel budget.
Each year, GasBuddy.com forecasts fuel prices for the year ahead. They predict that 2016 will be the fourth straight year of a declining national average price for a gallon of regular unleaded and diesel fuel.
GasBuddy is forecasting a national average of $2.28/gal of regular unleaded – down 12¢ from the 2015 average of $2.40.
They’re also forecasting lower diesel prices of $2.16 per gallon, down 55¢ from the $2.71 2015 national average. Read through the 2016 forecast at GasBuddy.com, including a month-by-month forecast. (2015 data source: AAA Fuel Gauge Report)
What should you budget for fuel in 2016?
Based on today’s situation, it seems conservative to carry your 2015 fuel expenses over as your 2016 budget (assuming the same number of trucks and general service area.)
The Potential Gotchas
It goes without staying that it is an extremely volatile time at home and abroad. The lower fuel prices that are good news for field service companies are leading to cutbacks in oil and gas companies and adding instability across some sectors of the US economy.
Instability around the globe could mean changes at any time that would put gas back at $4/gal. Be prepared for the possibility not just for your own fuel expenses taking a jarring jump upward, but for what it also means for your customers as they would have to invest more in automobile and heating fuel and spend less in proactive maintenance.
Control What you can Control
Besides keeping your fingers crossed and hoping that the 2016 forecast holds true, there are a few areas where you have more control over your fleet management budget.
1. Lower your total cost of fleet ownership (TCO).
Finding the balance point between replacing vehicles too quickly, but getting optimum resale value before you start to feel the pain from an increase in maintenance for an aging fleet is tricky. The acquisition cost is certainly the biggest factor in the TCO, and not a cost you want to incur any more often than necessary. But it is a one-time cost and just part of the lifetime TCO.
Calculate a simple TCO per mile per vehicle with this calculation:
(capital costs + operating costs) ÷ total miles traveled = TCO per mile
edmunds.com has a TCO tool for many vehicles. While it has more data for personal vehicles, there are some light commercial vans and pickups that many of you may use.
Identifying the vehicles in your fleet with the highest and lowest TCO will surely be helpful in making future purchasing decisions.
2. Get more miles per gallon and cover fewer miles.
You can’t control the cost of gas, but you can control how sensibly your crew uses it. This is where a good field service management solution will help you assign trucks to regions, and build fuel-efficient routes in those regions.
Also take a look at cutting your total vehicle weight. Heavy loads burn more fuel, so take a truck inventory, and unload the tools and materials that don’t need to be on the truck all day, every day.
3. Lower your opportunity costs.
Not only does common sense routing reduce your fuel consumption, it also cuts into your opportunity costs that grow when techs aren’t on the job site. Building optimized routes for each truck keep those costs as low as possible. Take a look at how customers set efficient routes with the ServiceTrade map-based scheduler.
GasBuddy.com and its mobile app are good tools for locating the lowest gas prices in your neighborhood. We wish you safe driving throughout the rest of the winter!
And about that jackpot…
We are happy to announce that the ServiceTrade crew won $8 in last week’s Powerball drawing! We immediately spent it on delicious, conciliatory donuts from Rise.