Should oil prices follow the trajectory currently being forecast by commodity strategists, 2017 could see pump prices follow suit, predicts fuel card company Arval.
As ever the main factor behind any retail changes will be the price of a barrel of crude oil which following agreed cuts to OPEC production is forecast to rise during 2017, finishing the year close to $60 a barrel. To put this into context in January 2016 Brent crude was trading at around $30 a barrel.
Mike Waters, Head of Product and Insight at Arval, said, “There is always a degree of uncertainty surrounding price forecasts but the direction of travel currently seems clear with crude already trading above $50 early into 2017.”
“A doubling of the market price for crude oil over a two year period will always be reflected in prices on UK forecourts, with current prices already around 16ppl higher than 12 months ago.”
“This should make fleets pause for thought when it comes to their fuel strategies. There is much that can be done to manage fuel costs but it does take committed management action.”
Arval’s figures show that fuel can make up as much as a third of the Whole Life Cost of a vehicle and Mike pointed out that a fuel card remained the cornerstone of sound fuel management.
“A fuel card gives you two fundamentals – a high level of control over spending and reliable, timely data. There is really no other way to achieve this.”
“Once you have a good fuel card in place, you can start to take action over day-to-day fuel purchasing and fuel use, specifying where fuel is bought and identifying the drivers and cars that deliver MPG figures outside of acceptable parameters.”
Mike said that, fuel prices were likely to lead to more fundamental changes, such as rethinking vehicle choice lists. “Higher fuel bills make it even more important for fleets to select the right vehicle type for the job at hand.”
“One of the interesting things about the last year or two is that, perhaps for the first time, there are genuine alternatives in terms of new technology to simply selecting petrol or diesel.”
“It could be that, as fuel prices rise, penetration of fleets into all kinds of hybrid and, to a lesser extent, of EVs, will increase. These drivetrains allow fleets to access new ways of circumventing pump price increases in ways that previously were just not possible.”