Lower petrol prices fuel business expansion
It may have felt over the past couple of years that the price of fuel has been as unpredictable as the British summer weather, and if you run a business it’s probably talked about just as much!
Yours may also have been one of the many businesses which has been able to take advantage of the relatively low prices over the past 12 months or so, as new research by RAC Business suggests UK firms have saved on average 11% on their fuel bills.*
Company owners have capitalised on the 10p drop at the pump since last June by investing in new vehicles and increasing the number of journeys driven by employees, according to our data.
The research, carried out among 500 business decision-makers, found that 24% of firms used the money saved on fuel to buy more vehicles; 26% made more journeys by vehicle; 21% increased the average mileage driven by staff and 22% say they bought larger, less fuel-efficient vehicles – suggesting that fuel bills are no longer as punishing.
In addition to that research, data from our team of analysts at RAC Fuel Watch shows that while fuel prices hit an all-time high in April 2012 of 142p per litre for petrol and 148p for diesel, they have been falling steadily since that point remaining on average at 108p for the past 12 months, despite a recent increase.
In June 2015, the average price per litre was 117p for petrol and 121p for diesel. As of July 2016, prices are now hovering around the 112p mark for both petrol and diesel, resulting in significant cost-savings for businesses across the board.
This summer the outcome of the EU referendum vote has created further volatility, but the fall in the strength of the pound has not sparked a big rise at the pump because it has been offset by a fall in the price of crude oil too. In fact prices are expected to come down in the next few weeks.
Findings from the RAC Business research includes nearly one in five (18%) firms taking advantage of the extra cash to invest in hybrid vehicles. This could be an indication that the technology driving hybrids is now at the point where businesses can benefit from the potential cost-savings of investing in a fleet.
RAC Business spokesperson Mike Fogden, commented on the research. He said:
“It’s encouraging to see how lower petrol and diesel costs are fuelling the entrepreneurial spirit of the UK’s business community. Rather than sitting back and simply enjoying reduced bills, owners are getting out on the road to drive their businesses forward. By adding new vehicles to fleets, embarking on more journeys and covering more miles, companies appear to be doing more business, which is a really positive sign for the future.
“The RAC Fuel Watch analysis suggests fuel prices are set to remain comparatively low in the medium to long-term, although it’s still difficult to predict due to the fluctuations of the global oil price. But we would go further and suggest a 2p cut at the pumps for unleaded petrol would bring down the average price, and provide more support for UK businesses.”
While the global price of oil and the price at the pump are well beyond our control, there a number of things you can do to help reduce fuel consumption across your fleet. For example, many more businesses are now using telematics units which monitor driver behaviour and encourage more fuel-efficient driving with savings on average of 10 to 15%. To find out more, go to: https://www.rac.co.uk/business/telematics.
*Research conducted among 500 UK business decision-makers by 3GEM Research and Insights in May 2016.
**Department for Transport’s Annual Road Traffic Estimates report 2015