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3 Reasons Local Governments Need a Fuel Contract

11 Apr 2018, Posted by McPherson Oil in Industry Information

As a government entity, cost savings is always a priority, especially because your tax payers are paying for a lot of your necessities. A great way to substantially save on the fluctuating price of fuel is through a fuel contract.

The decision to use a fixed fuel contract for commercial fuel services gives fleets a guaranteed price over the duration of the contract period. This results in easier budgeting, potential cost savings, and guaranteed supply.

Read on to find out why local governments need a fuel contract.

Fuel Contracts for the Budget Conscious

Diesel fuel prices are ever-changing. One week they can be cheaper than unleaded fuel, and the next, they can be significantly higher. Studies show that for the last 15 years, daily price fluctuations of 5 cents or more happen 25% of the time. This market volatility can drastically eat away at the pump and puncture a hole in your fleet’s budget.

However, with a fleet fuel contract, you can protect your budget from the price swings. You’ll know how much money fuel will cost you every month so you can plan your budget accordingly.

A contract means less time spent shopping for fuel prices. Instead of calling around to wholesalers to find the lowest prices, that time could be spent focusing on other aspects of your business. Having a contract eliminates price shopping out of the equation.

Fuel Contracts Protect You During Price Spikes

Fuel contracts help retailers avoid price inversion when supplies are running low. For example, on rare occasions when pipelines go down, it creates a decrease in supply. This leads to price inversions that can be very costly to consumers.

The scarcity of the product drives the price above that of branded or contracted fuels. Choosing a contract gives priority to customers when it comes time to distribute fuel.

Price is possibly the most important consideration when establishing a fuel contract. Educate yourself on different market prices to know what price to ask for during negotiations. Fuel contracts do not work for every fleet, so you can set fixed prices from 1 to 12 months should you need to back out of it at some point.

Call Us Now for The Best Fuel Contract

If you want to stabilize your fleet’s fuel cost and save money over a specific time frame, you need a fixed fuel contract. Take it a step further when you invest in total petroleum management (TPM), a specialty of McPherson Oil. You’ll cut back on administrative tasks with less receipts and invoices and cutting out the middleman. Call us today to discover if this is right for your company! Our fuel contract specialist is Brant Holladay. Call him directly at 205-661-4440 or email bholladay@mcphersonoil.com