ON THE MONEY: Why the fleet apathy to the pain at the pumps?
27 June 2008
The cost of petrol and diesel is rocketing, yet the evidence of two recent reports suggests businesses have been struck by some kind of fuel price paralysis, writes Rupert Saunders
Remember when the price of oil hit $100 a barrel? At the time it was regarded as the actions of a rogue trader trying to make a name for himself. If only.
Now the price of oil is the key topic at summit conferences, UK inflation has hit 3.3% and the boss of the Russian energy giant, Gazprom, has predicted it could reach $250 a barrel in the medium term.
For you, me and everybody else who has to run a car on business, that means more pain at the pumps.
And we're no longer talking short term here - you might have noticed the subtle change of emphasis over the past few weeks. This is not about a blip, or coping with summer demand during the American holiday season; this is a sea-change in the economic strength of one of the world's most valuable resources.
So much so that Gordon Brown is talking with other world leaders about the long-term solution of building more nuclear power plants to reduce our dependency on oil. Given that it takes at least seven years to complete one, I hope you get the picture: we are in for the long haul.
By way of confirmation on this, I asked a corporate banker friend of mine for the City view. He was unequivocal: nobody in the financial world is thinking short term anymore. The credit crunch (stimulated by US lending policy and rising energy prices) is with us for at least the next 18 months to two years, maybe longer.
So, if energy prices are worrying the Prime Minister and most of the brains in corporate banking, why is it not worrying you? I ask because there seems to be an enormous apathy in the business car industry about the rising cost of fuel.
The evidence is all around. As editor Tristan Young pointed out in his Opinion column, the most astonishing fact about the recent Green Fleet Research from leasing firm Alphabet was that 19% of respondents have no clue about what to do if fuel reaches £2 a litre. A further 24% said they would do nothing and just absorb the costs.
In the same week I received the annual Guide to Company Car Policies from Monks, the respected reward experts. Taking data from 197 companies who collectively manage more than 80,000 cars, this revealed that only 25% have a green transport plan and only 20% have set themselves a formal emissions target. (As an aside, rather bizarrely, Monks suggested that this meant fleet managers were "embracing the environment".)
Given that such apathy exists, the key question is: why? Is it because business car strategy is not a corporate priority (as some previous research into the industry by BCA has suggested) or is it because business car managers feel they do not have sufficient responsibility to deal with these issues?
If so, the global credit crunch might be just the catalyst needed to bring about a change. Get up from your desks and go do something about it because, in the present climate, doing nothing is not an option.