LOW BUY PRICE.

Obvious… sure. But how can you be confident that you are receiving the best possible price? Here are a few tips:

•  Make sure that your supplier links their price to a published number that has proven integrity. The most common price mechanism is RACK PRICE, which is a published rate for truckload purchases at each major fuel terminal. Most large companies, including mining and forestry giants, rely on this system. It allows you to get quotes that are “apples to apples” (as long as you ensure that supplier bids are based on the same time period).

•  You can access rack prices via the internet to keep tabs on the price changes.

•  Be aware of swings in service station pricing. Occasionally, retail price wars will drive retail pricing well below wholesale levels (most often for gasoline). You might as well take advantage when this happens.

•  Find the lowest price but make sure you consider all of the costs and benefits when you decide on a supplier. Some of the non-price factors are listed below.

CONVENIENCE & RELIABILITY.

Time is money. If the fuel service (or lack of service) causes you to experience delays or to work inefficiently, the real cost can be substantial. When choosing a supplier, the reliability/convenience of delivery services, cardlock locations and dispensing equipment should be considered.

FAVOURABLE CREDIT TERMS.

Credit terms in this industry are not all the same and the value to the customer can vary greatly. Managing cash flow is one of the greatest challenges in many businesses. How do you want to set-up your payment schedule? What can the supplier do to accommodate your cashflow requirements?

RECOVERY OF FUEL TAXES.

Fuel taxes in BC made another big jump this past year. Take the time to ensure that you are only paying the required taxes.

•  Are you getting rebates for clear fuel burned on private roads or off-road?
•  Are you burning marked fuel in reefer units, boats, garden equipment, etc.?
•  Have you provided your farm folio number to your supplier and signed a certificate of exemption?
•  Have you set up a separate exempt account for any fuel burned for power generation?

FUEL ECONOMY IMPROVEMENTS.

Don't assume that all companies are equal in fuel and lubricant quality and the resulting fuel economy. An improvement in fuel economy of 2 or 3 percent can mean substantial savings if the volumes are significant.

•  Diesel with a higher density will always have a higher BTU content and will give you better fuel economy. Every load your supplier picks up at a major terminal will have a density printed on the shipping document and it is not uncommon to see advantages of 2-3% between suppliers.
•  Differences in the energy content of gasolines tend to be small. However, the addition of fuel injector cleaners can mean a dramatic difference in the long-term performance of your vehicle. Oil companies inject their proprieatary additive formulation when trucks are loaded at the terminals. Some companies do not use any additives. Petro-Canada also offers a special winter formulation that eliminates the need for adding additional de-icer products.

EXTENDED OIL DRAIN INTERVALS.

Many major companies have discovered that a lower cost maintenance program might actually be achieved through purchasing higher quality lubricants. Extending drains and extending equipment life can have major implications on the cost of operating a fleet.

DELIVERY/HANDLING EFFICIENCIES.

Work with your supplier to find new delivery efficiencies and take advantage of the savings. Delivery and related costs are a key variable in fuel pricing. Special trips to make small deliveries mean a higher cost/litre for delivery. Consider “keep full” service or the possibility of increasing storage size. Some companies still offer special deals on a new tank lease or purchase.