5 Fuel Strategies to Save You Money

Transcription

1 5 Fuel Strategies to Save You Money Joe Basile, Vice President of Fuel Technologies FLEET FUEL MOTOR POOL GPS RTLS

2 Where does the fuel story begin? Today s average price = $3.36 per gallon 5 years ago = $2.42 A 38% increase 2

3 Where does the fuel story begin? 3

4 How much to operate a vehicle? A Chevrolet Impala, one of the most popular fleet vehicles, costs approximately $2,300 per year to fuel (using average fuel economy at 15,000 miles per year). A 5-10% drop could save you $115 to $230 per vehicle. For a fleet of 500 vehicles, that is $57,500 to $115,000 off the bottom line. 4

5 Webinar Agenda Part 1 How to save money ON fuel 1. Using less fuel (Improved security and accountability) 2. Using different fuel (Alternative fuels) 3. Using cheaper fuel (Alternative purchases, such as fuel hedging and direct billing) Part 2 How to save money WITH fuel 4. Beyond the pump (Fuel usage in the field with fleet cards) 5. At the pump (Communicating to improve maintenance) 5

6 Webinar Agenda Do you have to have a fuel management system in order to enact the ideas present? Fuel management technology will help you manage fuel costs and is important to implement some of the ideas presented, however it s not a requirement in order to benefit from this webinar. 6

7 Webinar Agenda Action Items This icon will accompany specific changes or actions you can implement within your organization, 7

8 Strategy 1 USING LESS FUEL THROUGH IMPROVED ACCOUNTABILITY AND SECURITY 8

9 Using Less fuel If you cannot measure it, you cannot manage it. Stop giving it away. Or at least make it harder to take. Theft Misuse (unauthorized vehicles, unauthorized people) 9

10 Action Items Verify people at the pump Keypad, HID Card, Keyfob Keep fuel users integrated with your employee management system 10

11 Action Items Verify the vehicle at the pump Require vehicle number at the time of pumping Nozzle tags and WAF (Wireless Automated Fueling) Fuel Inlet Antenna (FIA) 11

12 Action Items Keep authorized fueling events in check Set fueling limits Run Exception reports Make sure you have processes to highlight abnormalities Set up automated alerts for those abnormalities 12

13 Strategy 2 USING DIFFERENT FUEL BY INTEGRATING ALTERNATIVE FUELS 13

14 Are alternative fuels and power sources right for you? The per unit cost of alternative fuels is merely part of the story Other considerations: Infrastructure required Grants/tax credits Life-cycle costs Upfront costs of vehicle/engine equipped for alternative fuel Maintenance issues Environmental impact What is GGE? Gasoline gallon equivalent (GGE) 14

15 Alternative Fuel Matrix Gasoline Gallon Equivalent Maintenance Issues Average Price per gallon Gasoline/E10 Low % $3.70/gallon Sulfur Diesel 113% $3.91/gallon Biodiesel Propane B % B20-109% Hoses and seals may be affected by higher-percent blends, lubricity is improved over that of conventional diesel fuel. $4.24/gallon (B100) $3.89/gallon (B2) Propane (LPG) 73% $3.07/gallon Compressed Natural Gas (CNG) 5.66 pounds or cu ft. of CNG is 100% GGE High-pressure tanks require periodic inspection and certification. $2.17/gge Liquefied Natural Gas (LNG) 5.38 pounds of LNG is 100% GGE Ethanol/E100 E85-73% to 83% (variation due to ethanol content in E85) LNG is stored in cryogenic tanks with a specific hold time before the pressure build is relieved, the vehicle should be operated on a schedule to maintain a lower pressure in the tank. Special lubricants may be required. Practices are very similar, if not identical, to those for conventionally fueled operations. $1.30/gge $3.23/gallon 15

16 Life-Cycle Costs Things that may cost more: Cost of infrastructure New or expanded facilities (On average, a CNG station costs $1.5 mil) Increased inspections of tanks Upfront cost of vehicles Maintenance costs Additional training for technicians? Additional required inspections? 16

17 Life-Cycle Costs Ways to offset costs: Government rebates and incentives Example: Florida Natural Gas Vehicle Coalition (FNGVC) offers rebates to fund construction of natural gas vehicle fueling stations. The FNGVC has created 1,820 jobs and $68 million in wages in Laws and incentives vary across the US The U.S. Department of Energy s Alternative Fuel Data Center provides a lot of information to help you track the laws and incentive by state: 17

18 City of Columbus Case Study City of Columbus opened the largest fast-fill CNG station in Ohio Cost of station = $4.2 million Grants from Department of Energy (DOE) Clean Fuels Ohio = $1.1 million Has added 24 heavy duty CNG powered vehicles Will be open to both fleet vehicles and the public Expected savings $80,000 annually in fuel costs Reduction in carbon emissions equivalent to taking 96 vehicles of the road annually 18

19 Action Items Work with professionals to plan infrastructure and processes Engage your local government Think beyond your fleet Continue tracking and measuring your alternative fuels alongside traditional fuels 19

20 Strategy 3 USING CHEAPER FUEL THROUGH HEDGING, CONTRACTS AND MORE 20

21 Fuel Contracts and Hedging Fuel Hedging is used to reduce or eliminate a company's exposure to fluctuating fuel costs. It is a contractual tool allowing a company to fix or cap a fuel price at a certain level and period of time Essentially a tool to reduce risk Hedging is about having an insurance policy against prices rising Ben Brockwell, director of data, pricing and information services at the Oil Price Information Service Very common in the airline industry Most notably by Southwest Airlines 21

22 How does Fuel Hedging work? You establish a contract that locks in a prenegotiated price and quantity for months or years at a time 22

23 How does Fuel Hedging work? If prices go up, you win However, if prices go down or you need less fuel, you are still contracted to pay the higher price and purchase the contracted volume of fuel Biggest benefits: Cost Savings Stable fuel budget 23

24 Direct Bill Your Departments Does your department bill for fuel used, mileage driven or a fixed costs? Bill the departments or users for the fuel they use Benefits: More accurately recoups your true fuel costs Provides an incentive for departments to improve their own fuel usage 24

25 Snapshot: City of San Diego Former system for recovering fuel costs was included in an all encompassing monthly charge (by vehicle type) for all operational costs including maintenance, fuel and GPS. The new billing system allows departments to not only see their actual fuel consumption, but reduce their operational costs. 25

26 Snapshot: City of San Diego Results: We asked John Clements if this had saved money and here was his response: I cannot say this has saved fuel or not. The City of San Diego like many other entities is emerging from the recession and as a result there is a lot more vehicle activity including additional vehicles and increased usage in support of additional City workers (police officers, etc), repairing infrastructure (sidewalks, pot holes, etc) and enhanced or revitalized City services. 26

27 Action Items Understand your fuel usage Tie fuel usage to specific vehicles Work with your own internal finance teams and third party contractors to establish internal and external contracts Some other resources: Valuable information for both public and private fleets 27

28 Strategy 4 BEYOND THE PUMP MANAGING FUEL USAGE IN THE FIELD WITH FLEET CARDS 28

29 Tracking Fuel in the Field All fleets need a way to account for fuel purchased outside their own fuel pumps Options include reimbursements, corporate cards, gas cards and fleet cards The key question to ask yourself is What fuel data do I need regardless of where my driver fills up? and then make sure both your internal fueling sites (if you have them) and external fueling locations can meet these requirements. 29

30 Gas Cards (Level II) vs Fleet Cards (Level III) Gas Cards (Level II data) Fleet Cards (with Level III data) Allows you to track WHO/WHERE/WHEN a purchase is made Card user can purchase fuel Card user can purchase non-fuel items (Parts, etc) Allows you to place limits on purchase type (Can only be used at the pump, etc.) Allows you to place limits on purchase location Require an odometer reading at time of purchase Allows you to place comprehensive limits on purchases (such as # of gallons per purchase, dollar amount per purchase, set days of the week) Data integration to fleet management software Manual import Automated Integration* *True integration available with AssetWorks TRIPCard only 30

31 How to get the Data into Your System Importing vs. Integrating Most fleet management software can import a flat file provided by a credit card company (usually monthly) A flat file saves you manual entry time and improves accuracy, but it may not be as timely as needed True integration means that the data flows as soon as the transaction is pre-authorized Allows for alerts to be set for unauthorized purchases or questionable purchases Critical for comparing fuel purchases from internal and external pumps in a timely manner 31

32 Action Items Fuel cards can be purchased through a variety of vendors and often have different benefits, such as number of locations, card network and discounted fuel prices Data import must be coordinated with your fleet software provider AssetWorks offers a patent-pending fleet card called TRIPCard which stands for Timely Reportable Integrated Purchase Card and integrates directly into our fleet management software system where it can be used for billing and reporting 32

33 Strategy 5 AT THE PUMP COMMUNICATING TO IMPROVE MAINTENANCE 33

34 Consider Fuel Use for PM Schedules While meter readings are important and the basis of most PM programs, several of our fleet customers have also implemented alternative ways to schedule PMs Both City of Seattle and City of Kansas City use a combination of fuel usage/meter readings to schedule PMs 34

35 Snapshot: City of Seattle One of the reasons that City of Seattle selected FuelFocus in 2009 was because it gave them the ability to capture mileage. They identified 3 ways to schedule PMs 1. Mileage data feeds into the PM program 2. Fuel data feeds into the PM program 3. Establish Time standards 35

36 Snapshot: City of Seattle Results (looking at Police Patrol cars): Before FuelFocus PMs were scheduled reactionary (based on time interval of every 4 months) 3 PMs per year Results 10 Patrol cars 4 months = 30 PMs/year (3 times x 10 cars = 30) After FuelFocus PMs can be scheduled 1 of 3 ways: All patrol cars set to 4,000 miles 425 gallons of fuel 9 month intervals Whichever comes first Miles & Fuel =? 9 months = It would take you 27 months (2 yrs and 3 months) to do 30 PMs 36

37 Snapshot: City of Seattle Dave Seavey s advice: Calculate the number of PMs you would reduce (over maintaining) Calculate the cost savings achieved Calculate the labor hours you could spend somewhere else! 37

38 Snapshot: City of Kansas City Has been rolling this out by one vehicle class at a time for 2 year. Set an average mpg value and the amount of fuel that equals 3,000 miles PMs are scheduled by the (1) fuel used; (2) miles driven; or (3) a back up time trigger of 9 months for sedans and light duty vehicles 38

39 Snapshot: City of Kansas City Results: One huge advantage to moving to tracking usage by fuel consumption has been to support a new city-wide utilization policy Still working on tracking savings, but this is the basis of their Vehicle Replacement Plan 39

40 Make the fuel pump a communication tool (Data IN to your system) Require meter readings at the pump Validate those meter readings in the system. Stop fueling for unvalidated readings. Make sure the meter reading entered makes since sense (don t allow 999,999 as a meter reading) Apply exception reporting to notice odd readings, such as a meter reading that is much larger or smaller than expected based on normal use 40

41 Make the fuel pump a communication tool (Data OUT to your drivers) Alert drivers that PMs are due with messaging at the pump (if you have your own fuel pumps) Restrict drivers from fueling if they have overdue PM appointments 41

42 Make the fuel pump a communication tool (Talk directly to your vehicles) Passive GPS Similar to Active GPS, but without monthly cellular charges Unlike Active GPS, data is not available in real time Uses small device that hooks into ODBII port Can use RFID or WiFi to transmit information direct from vehicle engine to the fuel pump Vehicle information, as well as a location breadcrumb and activity history are stored in the passive GPS unit until downloaded at the maintenance or fueling location 42

43 Make the fuel pump a communication tool (Talk directly to your vehicles) How does this help save money on fuel? Meter readings: Automated meter readings are far more accurate than manual entries Diagnostic Trouble codes: Can be set to automatically create service requests or work orders. Better maintained vehicles are more fuel efficient. Driver Behavior Data (such as idle time, speed history and G-force events): Give management the facts they need to better train drivers in fuel efficient driving techniques. A vehicle that is driven optimally is more fuel efficient, as well. 43

44 Snapshot: City of Los Angeles The Los Angeles City Controller completed an audit of the City s citywide usage of fuel on March 29, Their audit was based on a sampling of five departments (LAPD, Fire, GSD, Recreation and Parks and the Los Angeles Convention Center) The City purchases approximately $26.6 million or 13.8 gallons of fuel each year. 44

45 Snapshot: City of Los Angeles Result: The audit determine that of that amount, $7 million (roughly 25% of spend) was dispensed through what the Controller described as high risk transactions which are defined as actions taken that indicate a potential misuse of public resources or a use for non-city related business. 45

46 Snapshot: City of Los Angeles The high risk transactions were categorized into four methods of high risk conduct: 1. Bypass transactions-when the locked panel is removed, electronic switch is deactivated to allow the user to dispense fuel with identifying vehicle 2. Keypad entry transactions-user activates the override button and is only required to input a vehicle number to dispense fuel 3. Master Card transactions-using a generic master card that is not tied to a vehicles 4. Use of four types of fuel credit cards which can be used at city owned gas facilities or commercial gas stations. 46

47 Wrap Up / Questions 5 Fuel Saving Strategies 1. Using less fuel (Improved security and accountability) 2. Using different fuel (Alternative fuels) 3. Using cheaper fuel (Alternative purchases, such as fuel hedging and direct billing) 4. Managing fuel beyond the pump (Fuel usage in the field with fleet cards) 5. Managing fuel at the pump (Communicating to improve maintenance) 47

48 Additional Resources Fuel Economy Alternative Fuels Fuel Hedging and Contracts TRIPCard 48