Fixed-price fuel card launched for fleets
18 February 2014
Author: Jack Carfrae
A new fuel card has been launched offering fixed-price diesel to fleets. The service, operated by fuel specialist Portland, allows businesses to pay for set amounts of fuel in regular instalments at a pre-arranged price, thereby fixing their costs in advance.
The firm offers similar services to the haulage and bus industries and is now targeting the fleet market, as managing director James Spencer told BusinessCar: "The card works like a conventional fuel card.
"With a traditional card, the price will change every week because it's reflecting the price of fuel that week. Our card uses the average retail price and we will fix that for a year."
He said that the service is aimed at small to medium-sized businesses "using between 10,000 litres [of fuel] per month to a million litres per month", as such organisations are considered too small for large-scale contracts with fuel companies such as BP.
Spencer said the price customers pay for fuel will be set at the national average retail price at the time of sign-up.
For example, a price of £1.40 per litre would remain without fluctuation for the length of the contract. The service also involves fleets committing to using a specified volume of fuel.
The company is able to make a profit by buying fuel at pre-arranged prices from oil traders, thereby safeguarding itself from price rises.
Spencer likened the programme to a fixed-rate mortgage and claimed the benefit was in effective budgeting rather than cost savings.
"With a [normal] fuel card, you have no idea how much you're going to spend on fuel. You don't know what the price of diesel is going to be next month.
"[Our card offers] the opportunity to fix your fuel cost at today's national average fuel price. You can make a variable cost a fixed cost like any other. You're not trying to beat the market, you're just trying to nail it down."
He admitted that customers could end up paying more if fuel prices were to drop: "Of course, you do risk paying more for it, we're honest about that.
"But the writing is on the wall for where fuel prices are going. We'll just say we'll give you certainty."
The card can be used at "just over 1000" UK petrol stations including Tesco and Morrisons supermarket stations.
Sites that accept the card can be identified on Portland's website (although Tesco petrol stations cannot be identified by this method) and Spencer said printed location booklets could be arranged.
The firm also offers petrol fuel cards but states that it specialises in diesel supply.