Time to Get Off the Fuel Price Roller Coaster

The price of gas is going up. Diesel is coming down. No, wait a minute. Are they both coming down, going up or staying the same? The headlines before Christmas clearly stated fuel prices—gasoline and diesel—will decline in 2014. That’s good news, right? After all, lower fuel prices not only help the average consumer, it helps companies and the supply chain.

Unfortunately, predictions like those made in the news media are much the same as those of your local weather person. They tell you tomorrow will be sunny and the 70s. Trouble is, you wake up and discover it’s rainy and in the 50s.

According to AAA’s most recent survey, fewer than half of the states reported price increases while only three had price decreases. Of those sates paying more, at least ten reported hikes between 11 cents and 23 cents per gallon. This report confirms an article from January 13 in Supply Chain Management Review. The headline read “Fuel Volatility a Given in 2014.”

CNG has other benefits aside from low fuel cost. Unlike fuel cells and electric vehicles that offer promise for the future, CNG works now.”

Price uncertainty has become the norm, but must it? What if you could count on a constant price of fuel for 12 months, 24 months or longer? Well, you can if you select the right fuel. It’s called compressed natural gas or CNG for short. CNG is a fuel that not only offers a steady price, it offers the same performance at a cost 41% less than gasoline and about 50% less than diesel.  These savings vary by location. The table below provides price/savings examples from across the country.

_{Sources: 1 Gasbuddy.com; 2 CNGPrices.com}

As mentioned, the price of CNG is very stable. How many price spikes have you endured with gasoline and diesel since 2012? If there was a hurricane, tension in the Middle East, financial troubles in Europe, financial troubles here, refinery problems and seasonal gas blend changes (mainly for us in the northern US), you likely experienced a spike in gasoline and fuel prices. Now, how many price spikes did CNG have in the same time period? Answer: NONE, Zip, zilch, nada. Ok, it may have fluctuated by a penny or two but nothing like the increases experienced in those same two years by gasoline and diesel.

CNG uses the same gasoline or diesel engine that’s in your pickup or Class 8 tractor and everything in between. However, it does require a modification kit, which ranges from $6,000 up to $40,000 for the big rigs. Even with that additional cost, your ROI can be less than three years.

Companies including UPS, Frito Lay, AT&T, and Waste Management are among those investing heavily in CNG for their respective supply chains. Still, CNG is growing in the warehouse with Toyota and Linde offering CNG forklifts.

CNG has other benefits aside from low fuel cost. Unlike fuel cells and electric vehicles that offer promise for the future, CNG works now. It ranks among the cleanest fuels available and the infrastructure is growing daily.

Is CNG right for your material handling operation? Can it provide your supply chain with consistent fuel price forecasting? There’s one way to find out. This CNG calculator can determine if CNG is right for your company.

CNG is becoming an important piece to a profitable supply chain just like having a material handling professional to help improve your internal supply chain with items including conveyors, pallet racks and forklifts. Contact us today for a free material handling consultation.