Your company’s costs can vary from season to season, but there’s one thing your fleet will never stop needing: fuel. But the amount of fuel you need (and the amount of money you spend on it) can vary greatly depending on the state of the economy.
In general, the economic cycle consists of four phases: expansion, peak, contraction, and recovery. Each part of the cycle comes with its own unique impact on consumer spending, and various sectors will see performance improve or suffer with each economic turn.
The Economic Cycle Explained
During the expansion phase, the economy starts to boom. Consumers want more goods, so production increases. Your fleet will likely spend more money on fuel than in other phases of the economic cycle; if you’re delivering more goods, you’ll need more fuel!
In an economic peak, the economy reaches the limit of its growth. Consumers are still spending, but businesses may struggle to meet demand. Fuel spending will either continue to increase or start to level out as the contraction phase nears.
During the contraction phase, consumers spend less, so production slows down. Consumer spending is focused on utilities and staple products during these times; if your fleet delivers discretionary goods, you may find business slowing down and won’t spend as much on fuel.
Finally, the economy moves into the recovery phase, when it begins improving and starts the cycle all over again. Consumers slowly resume spending, causing production to ramp back up. No matter what industry you’re in, you’ll see a slow increase in fuel spending and fleet card usage.
How to Spend Confidently in Any Financial Climate
While the economy tends to go through this typical cycle, you can’t always predict how your fuel spending will be impacted. Still, there are steps you can take to protect your bottom line regardless of the state of the economy.
When the economy is booming and consumer demands are high, it only follows that your fleet will be busy. If you know you’re coming up on a busy period or are simply seeing the economy improve in general, it’s smart to prepare for long days and increased fuel spending. Having a fleet card program can help you track spending and keep your budget in check even in the busiest of seasons.
Fleet management software can be invaluable when preparing for economic changes. With a dedicated fuel card program, you can track how much your drivers are spending on fuel every month and identify ways to cut back. Keep an eye on your fuel spending in comparison with the state of the economy to help you budget for fuel in the future.
Finally, when your business has a bit of breathing room, consider buying fuel in bulk. If you have a reliable cache of fuel on hand, you can rest assured your fleet will stay on the road even when the prices at the pump are on the rise.
Working with Guttman
Guttman Energy works with fleets across the country offering fuel card programs and helping monitor fleet fuel card usage. Contact Guttman Energy today to learn more.
