Starting in 2004, a “new normal” asserted itself within the US fuel markets. These markets have seen price swings of 3 cents or greater nearly 50% of the time versus only 6% of the time in prior years. For fuel buyers, this means getting the timing right when procuring fuel has never been more important due to the financial impact to a business.
Today when consumers are pumping gas into their vehicles, they are all asking themselves the same question, “Are the high fuel prices I’m paying over and over the “new normal?” Given the stakes, companies that rely on fuel to drive their business need to ask themselves the same question. Companies that fail to do so, are likely to suffer serious consequences – ones found more frequently in the details of their financial statements. FuelQuest President & CEO, Matt Tormollen, contributes an article on this new normal and discusses how companies that embrace best practices, as well as automated fuel-purchasing technology or outsourcing, enjoy a newfound ability to control their costs, improve their bottom lines, and move confidently into the future.
Forbes, November 12, 2012
White Paper: Thriving in the New Normal
Whether retailers, wholesale marketers, or fleet-based companies, fuel buyers have one thing in common — fuel costs can make or break the bottom line. For retailers and marketers, the ability to purchase effectively not only positively impacts fuel margins, but enables pricing strategies that drive greater in-store traffic and increase non-fuel product sales. Fleet operators sometimes build fuel cost assumptions into their budgets, making it difficult to adjust to increasing or decreasing fuel costs. Effective management of fuel costs is clearly a critical success factor for many businesses.
This report provides the data and analysis supporting the existence of this new normal as well as examines gasoline and diesel pricing trends on both a national and regional basis. Readers of this report will gain an understanding of where the markets have been and where they might go next as well as insight into the effects on their fuel buying operations and bottom line.
Oil prices have gone through a wild ride this year, rising more than 10% to $110.50 a barrel by March 1, then dropping nearly 30% to $77.56 by late June, and now surging 24.3% to Monday's open to $96.38. It comes as no surprise that commodity prices are highly volatile, but researchers at FuelQuest have shown the exponential increase in wild price swings started in 2004, when electronic trading proliferated and hedge funds and other market players jumped in the market looking for bigger returns in a world of low interest rates.Forbes, September 4, 2012