Fuel Lines August 2009

Fuel Lines

Critical News & Information for Businesses

that Depend on Fuel and Fuel Services

Over the last several months I have had to take public transportation, buses, subways, Amtrak to get to my destinations. Normally, I don't need to but I was going to cities like New York, Boston and Chicago and to get around in a car or pay for parking it was crazy. What I learned on these trips were how much more relaxing they were and very timely on Amtrak. I use to fly to Boston from Philadelphia. You know the story arrive early, go through security, shoes off, lap top out, I real pain in the... As I write this story I am on Amtrak. Arrived 15 minutes before the train departed, emailing and talking on cell phone as if I was in the office only quiet. It doesn't take any longer either if you put in your other time to fly. The Carbon Footprint is much lower and Amtrak is a member of Carbonfund.org. So, next time your thinking of going somewhere consider public transportation.

The time to start planning and cutting cost is now Sokolis Group.

Glen Sokolis

President

If you have an idea or topic you would like to see discussed here or if you would like to contribute an article for future issues, please e-mail me at gsokolis@sokolisgroup.com

As Fuel Prices Rock & Roll

As we move into August and the "peak driving season" is coming to an end, we are still sitting on a huge surplus of gas and diesel fuel. Why? The gas is an easy one. Even though gas prices are down 45% since this time last year, people have maintained their conservative driving habits that they learned last year. It's about as basic as fuel management gets, don't but any fuel. Then there is nothing to manage.

With diesel fuel prices, it's just as easy a question to answer. Diesel fuel prices are lower for fleet fuel because unemployment is high and goods are not needed to be moved by truck fleets to get them to their destination. Does that mean fuel management is easy for trucking companies? Heck no! We have seen diesel fuel go from a national average price of $2.019 on March 16th of this year to $2.616 on June 22nd and as we stand today the diesel fuel price is $2.528 on July 27th. Do you think your suppliers could be making an extra profit margin from you?

As we know crude has done this dance totally driven by speculation from $51 a barrel of oil in March, to $62 a barrel in May, $71 a barrel in June, $59 a barrel mid July, and $68.50 a barrel a couple of days ago. All of the while that big difference in the price of gas and diesel fuel that was more than $1 a gallon has gone away. In some areas diesel fuel is actually cheaper. Strange isn't it, you may think your margins for gas and diesel fuel are really low. You also might be wrong.

Big oil quarterly profit reports all look bad. Well bad is a relative word when you were reporting net profits of 10-12 billion, yes 10-12 billion dollars net per quarter. That was not revenue that was bottom line profits and I am sure it was after a lot of write downs and write offs or that number would have been higher. See the problem now with most of these companies is they were living fat, dumb and happy and not doing good fuel management. Actually, they don't care about fuel management only that the oil keeps coming out of the ground, which is where most of them make their money or on the crack spreads (difference between crude and gas/diesel).

Who's making money in this fuel management game right now? It's the downstream petroleum marketers. Believe it or not when prices were racing to the moon these guys really weren't making that much money. Now, they can because there is room to play with the fuel prices and their profit margin. Who are these downstream marketers you might ask? It's the people you are buying your fuel from today. It is bulk fuel suppliers, truck stop operators, and retail gas stations. These are downstream away from the refinery gate.

Do you think last year was difficult on these guys? Take a look at Flying J, filed Chapter 11, look up Travel Centers of America's financial reports. Well now things have changed a little bit. If you are Pilot Truck Stops you don't go out and spend 1.7 billion dollars to buy Flying J if you aren't doing well or don't think demand is going to turn around soon.

As they say "Buyer Beware". Your favorite supplier may be making more money from you now than ever before. Can that be true? You have to be the judge in determining the effectiveness of your fuel management program and your satisfaction with your current fuel costs. I know our clients aren't paying anymore margin today than last year, most are paying less. Do you know what margins you are paying your fuel vendors? Should you know? I am sure when you are buying Capital Expense items you know the profit margin your supplier is charging you. Wouldn't you want to know what one of your top expense item's margins are? If you knew you could gain control and do something about them.

Or maybe we can do it for you at Sokolis Group. Look at it this way. On a Capital Expense the cost in most cases doesn't even change that much over a period of time. Fuel prices change all the time. Who's watching your back? Sokolis Group is a fuel management and fuel consulting company with a high quality fuel expert staff that can help your company save money on fuel costs today.

Don't believe me? Believe these people click here.

Plan Ahead. Review the conference program in advance and choose the sessions you want to attend. Plan to arrive at each session before it fills up.

Pack for your destination, but don't forget the environment inside the meeting venue. Make sure you have shoes comfortable enough to walk in and clothing you can layer, as temperatures in meeting rooms can vary.

Get to the registration desk a little earlier than you think you need to on the first day. This will give you time to get your bearings within the conference facility.

Talk to everyone. You can often gain some of the best information outside the sessions - in hallways or in the hotel lobby.

Wear your name badge at all times, but introduce yourself to others as well. People are extremely welcoming. The person stading next to you may be dealing with the same "burning issue" as you, or may have a solution. Not all the experts at the conference are behind a microphone.

Engage with speakers. Ask general questions in the session that will benefit everyone; follwow up with speakers later to ask specific question that will benefit you. Take their contact information and reach out after the conference - speakers are usually generous with their expertise if you've participated in their session.

Take advantage of built-in networking opportunities. Conference organizers understand the benefits of networking. If you've come with a group, split up and meet new people.

When you get home, take action. Call those people you said you would contact, check on the products and services that intrigued you and put what you've learned into action. share those takeaways with your colleagues. Stay connected with industty associations to continue learning from the best and brightest in your field.