Portable Sanitation Association International

ASSOCIATIONINSIGHT Portable Sanitation Association International News BIWEEKLY EDITION MARCH 31, 2021 Page 14 Fuel Prices: What to Expect Ahead…continued from page 13 Regional Price Differences Are Real Earlier in this article I discussed average fuel prices. You may have thought those numbers were spot-on, or you may have thought they missed the mark based on your experience. An average is just that—somewhere near the middle. Some of you paid less, and some paid more than those numbers. In general, the further away an area is from the source of supply, the more expensive gas will be. This is true both on the large scale and the small. As shown on the EIA map at right, regional prices can vary widely by distance from refineries. In addition, a gas station in a remote rural area will generally have higher prices than a station in a metropolitan area within the same region. Generally, though, the regions mostly "swim in their lanes" and don't switch positions in relationship to one another much. So you can estimate whether your region's prices will be higher or lower than average based on its relative position compared to the other regions in the chart shown below. California typically has prices that are higher than other states because there are comparatively few sources of supply for the blend of gasoline required there. This makes their supply more vulnerable to production problems, such as if a refinery has to stop operating for maintenance or experiences an accident. In addition, California has some of the highest state taxes on fuel. Therefore, it is important to recognize that certain factors may affect prices in your area more than they affect prices in others. Take the time to learn what these factors are and whether there is anything you can do to mitigate the impact on your company. Adjust your expectations for what you will be paying for gas this year accordingly, using the projected numbers above as a baseline. Reduce the Impact of Fuel Price Changes on Your Company The cost of fuel is a large factor in a portable sanitation company's financial performance. On average, fuel costs represent 10–18 percent of gross sales, and it varies by region, the location of the company in relation to its customers, and the nature of the truck fleet. As we have seen, there is not a lot any individual can do to affect the cost of fuel. There may, however, be things you can do to positively impact how fuel prices affect your bottom line. • If transportation is costly and supplies are often interrupted by weather events, it may make sense to buy fuel in bulk when it's cheaper and store it so you are not as vulnerable to the temporary fluctuations in price and availability. This will generally require investment in proper fuel holding tanks and a permit to operate them. • Look to preventative maintenance. When vehicles are in good running order, they use less fuel. Some experts estimate that a properly maintained vehicle can improve its fuel economy by 40 percent. A simple thing is correct tire inflation. When drivers do their pre- and post-checks, encourage them to check the tires. According to a 2006 report from the National Highway Traffic Safety Administration, you can expect a drop of 0.2 percent in gas mileage for every 1 psi lower than the recommended pressure a tire is under-inflated. Continued on page 15

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