Could you use advanced fuel management systems to control soaring fuel costs?

The industrial landscape has seen significant shifts in the last few years, and organisations across the UK are struggling to keep a handle on escalating fuel costs, the impact of which can be severe where margins or budgets are slim.

Only a few months or years ago it would have been reasonable to assume that very few businesses were using fuel management systems at all, and those that were, were primarily using basic data gathering and reporting systems designed to monitor fuel supplies at truckstops and other fuel depots. These systems have existed for decades and have mainly been employed by companies wishing to ensure that their depots were always optimally stocked, balancing cashflow with the need for sufficient fuel to operate. There were of course additional fuel security benefits to this kind of system - any dramatic drops in fuel stocks would alert managers who could quickly investigate leaks and theft - but traditional fuel management systems were not built with fuel security at their heart.

The last few years have changed the game and we are seeing significant changes globally that have affected fuel security here in the UK.

The Pandemic: two and a half years on from the first lockdown and we are still feeling the effects of the pandemic in the fuel industry. Fuel costs are linked to the cost of crude oil, and while crude oil was cheaper at the beginning of the pandemic with many businesses closed, as life has returned to normal, suppliers have struggled to keep up with the demand for energy, and prices have increased. In addition, backlogs and disruptions to supply chains (in particular to the supply of steel) mean that when it comes to fuel storage systems, the UK as a whole is now working to lead times of 5-8 months for new system installations. This means that we are increasingly vulnerable to fuel price fluctuation as we are unable to increase our domestic fuel stocks in any meaningful way to avoid being at the mercy of market volatility.

Market volatility: Another problem is sterling’s position against the dollar. Over the last couple of years, the pound has fallen against the dollar, making it more expensive to purchase crude oil, thus increasing the cost of fuel here at home.

Geopolitics: With fuel prices already on the rise, Russia’s invasion of Ukraine in February of this year had pushed fuel prices even higher. Although the UK imports just 6% of its crude oil from Russia, it is still affected when global prices increase. Russia is one of the world's largest oil exporters, but is facing international sanctions as a result of its actions in Ukraine:

• the US has announced a complete ban on Russian oil imports;

• EU leaders say they will block most Russian oil imports by the end of the year;

• and here in the UK we have already started phasing out Russian oil.

This means demand for oil from other producers has increased, leading to higher prices.

HMRC & Tax Law: In April of this year, the laws surrounding the eligibility to use rebated ‘red-diesel’ changed. This change has had a significant impact on businesses and organisations in all industry sectors, and in particular the construction industry. Businesses that store fuel are now storing & dispensing white diesel where previously they held gasoil, and are falling prey to increased fuel theft and misuse with any ullage coming at a greater cost.

As a result of these changes, businesses in the UK that want to regain control of their costs need to get serious about how they are managing their fuel. Gone are the days where fuel could be stored and monitored with a light touch. The businesses that are thriving in today’s market are the ones that are able to stay on top of the data, using it to make informed business decisions, and are in complete control of the fuel that they dispense.

The Fuel Management Systems that we are installing in 2022 fulfil both of those functions.

Using fuel management data to drive business decisions

Fuel Management Systems will show historical and real-time data enabling future predictions based on historical peaks and troughs in fuel demand, comparing year-on-year. This enables fuel managers to shop for the best prices and purchase at the right time by producing data on the price businesses are paying for fuel and comparing it with the average refinery gate price.

This kind of system will also automatically generate real time-fuelling information highlighting vehicles and people using excessive amounts of fuel, allowing managers to quickly delve into the data behind these issues, and make business decisions about fleet maintenance and driver behaviour.

Our fuel management systems also provide automated alerts to fuel managers in the case of significant changes to stock levels enabling companies to prioritise environmental response (facilitating maintenance in the case of spills) and security (in the case of theft from the tank). 

Using fuel management systems & telematics to automate and control fuel dispensing

In the last 12 months, we have seen an uptake in the number of businesses requiring advanced fuel management systems that rely on telematics, or vehicle tracking systems. These decisions are frequently motivated by a desire to tighten up fuel security and prevent fuel misuse and fuel theft from the nozzle.

This kind of fuel management system gives complete control over fuel dispensing back to the business, preventing the filling of unauthorised vehicles and secondary containers.

To use an example, we have recently designed and installed an advanced fuel storage and management system for a large utilities company in the UK. The new refuelling facility was designed with an enhanced automated fuel management system at its heart which removes the need for manual data entry, and thus potential for human error, and allows the business to track all vehicle or plant refuelling, combining depot tank measurements with fuel card usage.

With access to this kind of data, as well as the automated restriction of fuelling to authorised vehicles and plant, businesses are able to regain control of their fuel costs, eliminating or reducing all forms of wastage and loss from theft and misuse to wastage linked to vehicle maintenance issues, and everything in between.

For more information about fuel security, fuel management systems and telematics, please have a read of the relevant sections on our website and get in touch.