Martin Wedge, director of OVL, looks at the fall in fuel costs and the hidden impact on businesses.
Fleet managers and finance directors may have great news for their businesses in terms of lower expense claims as fuel costs – so long the bane of their lives – continue to head south.
The price of unleaded petrol has fallen to its lowest level in five years, and so it continues with claims that the supermarket price war could soon result in a pound per litre on the forecourt.
Currently, the average unleaded price across the UK is 109.8p a litre, according to the information group Experian Catalist. The last time it dipped below 110p was exactly five years ago, on January 3rd, 2010.
However fuel prices are determined more by taxes than by the cost of oil.
According to the RAC, if a tank of petrol costs £61, VAT and fuel duty account for £41, but with falling treasury revenues in recent years there will be no appetite in Number 11 Downing Street to cut the duty that it has already frozen for the last three years.
Indeed, in a General Election year, it could even be a recipe for increasing the duty as Government and Opposition try and out-manoeuvre each other to increase funding for the NHS, for example, which is still regarded as the political golden fleece.
But, we also cannot return to the old ways of ‘pump profligacy’. In the climate of adversity, we have learned so much about cutting costs and carbs and making the most of less in the true spirit of necessity being the mother of invention. Businesses are simply miles better for greater time and travel efficiency.
Fleet managers have understandably imposed journey moratoriums and businesses are using technology more to stay in touch including video-conferencing and Skype, for example. I see this trend continuing, irrespective of the price of Brent Crude. We simply cannot go back to testosterone travel trends, the notching up of business miles to boost egos and expenses.