Fuel price fluctuations are a major challenge for UK fleet managers, with costs often making up 30-60% of operating expenses. Even a small price rise, like 10p per litre, can cost a 20-vehicle fleet an extra £50,000 annually. To manage this uncertainty, flexible fuel budgeting and smarter strategies are essential.
Key Takeaways:
- Fuel Prices Impact Margins: A 10p per litre increase adds £2,500 per year per vehicle covering 100,000 miles.
- Flexible Budgets Work: Businesses using flexible budgets and tools cut fuel costs by 24% in 2024.
- Main Price Drivers: Global oil markets, UK fuel duty (52.95p/litre), retailer margins, and supply chain issues.
- Practical Savings: Route planning, telematics, and fuel cards reduce costs by up to 20%.
Quick Tips:
- Monitor Trends: Track crude oil prices and exchange rates to forecast costs.
- Scenario Planning: Prepare for best, base, and worst-case price changes.
- Use Tech: Telematics and fuel cards help manage consumption and spending.
- Plan Routes: Efficient routes reduce mileage and fuel use.
- Review Regularly: Compare actual costs to forecasts monthly and adjust.
Managing fuel costs requires a dynamic approach, combining data, technology, and regular reviews. These steps not only help control expenses but also improve fleet efficiency in an unpredictable market.
Steps to Reduce Your Fleet's Fuel Spend | Fleet Management Tips
What Causes Fuel Price Changes
Grasping the factors that drive fuel prices is key to managing and predicting costs effectively. Both global and local influences can cause prices to shift unexpectedly, creating a complex landscape that warrants closer examination.
Main Factors Behind UK Fuel Prices
The global oil market is the backbone of UK fuel pricing. Crude oil prices are shaped by worldwide supply and demand, with major oil-producing nations holding significant sway. Even smaller players like Iran, which contributes just 3% to global supply, can cause noticeable fluctuations during periods of geopolitical tension.
The UK government’s fuel duty policy is another major factor. At 52.95 pence per litre, fuel duty makes up a large portion of the pump price. The government’s decision to maintain the 5 pence per litre cut in fuel duty has helped prevent petrol prices from climbing back to pre-COVID levels.
Retailer margins have also become a growing concern. From March to May 2025, the average petrol retail margin stood at 15.4 pence per litre, more than double the 2015-2019 average of 6.5 pence per litre. Diesel margins have seen an even sharper increase, averaging 18.8 pence per litre compared to 8.6 pence during the same period.
Dan Turnbull, Senior Director of Markets at the Competition and Markets Authority (CMA), commented on this issue:
"While there is uncertainty over how global events will impact the price of oil, our report shows fuel margins remain elevated despite recent lower pump prices."
This trend has hit fleet operators hard. Between 2019 and 2022, the big four supermarkets increased their average fuel margins by 6 pence per litre, costing customers an estimated £900 million.
Supply chain disruptions, such as refinery maintenance, transport delays, or extreme weather, can create temporary shortages and drive up prices. Given the interconnected nature of global fuel supplies, issues in one region can quickly ripple through to the UK.
Seasonal demand patterns also play a role, especially for heating fuels. Gas consumption in the UK rises by 75% during the winter compared to summer, with January typically seeing prices around 12% higher than the yearly average. This seasonal fluctuation not only affects heating costs but can also influence the broader energy market.
Fuel Price Trends and Alternative Fuels
Recent trends highlight just how unpredictable fuel prices can be. Between late February and late May 2025, UK petrol prices dropped by 7.6 pence per litre, while diesel prices fell by 8.4 pence per litre. By the end of May 2025, the average prices for petrol and diesel were 132.0 pence and 138.4 pence per litre, respectively.
However, this short-term dip doesn’t eliminate concerns about market volatility. Luke Bosdet, the AA’s fuel price spokesperson, warned:
"Although pump price movements in recent weeks have been relatively flat, concerns with market volatility remain"
A persistent diesel premium over petrol has become a notable feature of the UK market. On 30th June 2025, unleaded petrol averaged 132.95 pence per litre, while diesel stood at 140.26 pence per litre. This price gap significantly impacts fleet operators who depend on diesel vehicles.
Alternative fuels are increasingly being explored as a way to mitigate exposure to traditional fuel price swings. Options like Hydrotreated Vegetable Oil (HVO) and Gas-to-Liquid (GTL) fuels offer potential solutions, though their pricing and availability differ from conventional fuels. While these alternatives can provide some relief from crude oil price volatility, they come with their own market dynamics.
The gradual shift towards renewable energy may eventually help stabilise fuel prices, though the transition will take time. Additionally, climate change could reshape traditional seasonal demand patterns, potentially reducing some of the predictable price spikes that fleet managers have come to anticipate.
These insights provide a foundation for planning more adaptable fuel budgets.
Building a Flexible Fuel Budget
Fuel costs often make up about 60% of a fleet's annual expenses. To manage these costs effectively, it’s crucial to create a fuel budget that can adjust to market fluctuations. Rigid, fixed projections can quickly become outdated, so adopting a more dynamic approach is key. Here’s how precise forecasting and scenario planning can help you build a budget that works in changing conditions.
Forecasting and Planning for Different Scenarios
Start by analysing historical fuel data from the past 12–24 months to spot consumption patterns and seasonal trends. This provides a foundation for understanding how your fleet’s fuel usage shifts throughout the year.
To refine these forecasts, keep an eye on external factors like crude oil prices (e.g., Brent futures) and the pound’s exchange rate. These indicators can signal potential price changes, helping you anticipate market movements.
Plan for various scenarios - best-case, worst-case, and base-case - that reflect different market conditions and operational realities. For instance, a best-case scenario might assume lower fuel prices alongside efficiency gains from route optimisation. On the other hand, a worst-case scenario should prepare for price increases, such as the rise in petrol prices from 142.9p to 154.0p per litre between May and October 2023.
Factor in an adjustment allowance for unexpected price spikes. With projections showing a steady increase in wholesale fuel prices through 2040, having a contingency in place is essential.
Fuel estimators can also be incredibly useful. They help predict usage based on factors like distance, vehicle type, and load, while also highlighting areas for efficiency improvements, such as reducing idling time.
To manage costs further, consider negotiating fixed fuel prices with suppliers or exploring bulk-buying options. While such strategies might limit flexibility, they can provide stability for a portion of your fuel needs, simplifying budget management for the remainder.
Finally, ensure your forecasts stay relevant by reviewing and updating them regularly to reflect real-time data.
Regular Budget Reviews and Updates
Monthly performance monitoring is essential for keeping your budget on track. Compare actual spending against your benchmarks and review progress on set dates.
Track key performance indicators (KPIs) such as fuel consumption per vehicle, cost per mile, and overall efficiency trends. This helps separate the impact of price changes from operational inefficiencies.
Use these reviews to make quarterly adjustments based on price trends and efficiency improvements. Annual assessments can then refine your budgeting approach by incorporating lessons learned and adapting to new challenges.
The data collected during these reviews can also guide broader decisions, like optimising routes, scheduling vehicle replacements, or implementing driver training programmes. For example, you might discover that certain routes are no longer cost-effective due to increased traffic or that specific vehicles are requiring more frequent maintenance.
Fleet management tools can automate much of this process, alerting you to spending anomalies and generating detailed performance reports.
The aim isn’t to predict every detail perfectly but to build a system that can adapt quickly to changes while maintaining operational efficiency. As market conditions shift, your budgeting process should evolve too, leveraging new data and continuously improving accuracy.
Practical Ways to Cut Fuel Costs
If you're looking to lower your fleet's fuel expenses, a flexible budget is a good start, but real savings come from practical strategies. By focusing on efficient operations and utilising technology, you can significantly reduce costs and better manage fluctuating fuel prices.
Route Planning and Mileage Reduction
Carefully planned routes can make a big difference. Opt for paths with lighter traffic and fewer stop-and-go situations, as idling wastes a surprising amount of fuel. In fact, even minor speed variations can increase fuel consumption by as much as 20%. Interestingly, the shortest route isn't always the cheapest - sometimes a slightly longer route with smoother traffic flow saves more fuel. For light-duty trucks, staying within the speed range of 40 to 50 mph is ideal, as fuel efficiency drops sharply above 60 mph.
Consolidating stops into a single trip is another smart move. This keeps the engine warm and avoids the extra fuel burned during cold starts. Also, make sure to use appropriately sized vehicles for each job. Avoid running half-empty trucks and plan for backhauls or pickups along the return journey to maximise efficiency.
"Effective route planning can help cut down transportation, fuel and maintenance costs." - Fleetex
When planning routes, consider vehicle maintenance schedules, avoid high-traffic zones, and account for weather conditions that could affect fuel use. Road planning apps can help by suggesting optimal break spots and updating estimated arrival times as conditions change.
Using Telematics for Better Fuel Efficiency
Telematics systems go hand-in-hand with route planning to fine-tune fuel efficiency. These tools provide real-time data on vehicle performance and driver behaviour, helping fleets improve fuel efficiency by up to 20%. Monitoring driver habits is key since aggressive driving can increase fuel consumption by as much as 30%.
Platforms like GRS Fleet Telematics offer detailed tracking of fuel usage, driver behaviour, and vehicle performance. These insights let fleet managers make informed decisions using eco-driving analytics and integrated route planning tools.
Telematics systems can also flag maintenance issues before they affect fuel efficiency, and they help prevent fuel theft by identifying unusual consumption patterns. Many fleets using these data-driven tools have reported operational savings of up to 18% in their first year. For example, MiX by Powerfleet users have seen average fuel savings of 10%.
Fuel Cards and Automated Expense Tracking
Beyond operational strategies, managing expenses efficiently is another way to cut fuel costs. Fuel cards simplify expense tracking, offer fixed pricing to stabilise budgets, and integrate with tracking systems for better oversight. They also reduce the risk of fraud and cut down on manual processes.
When selecting a fuel card, make sure it suits your fleet's needs. Look at fee structures and extra perks like toll discounts or VAT recovery. Many fuel cards also work seamlessly with vehicle tracking systems, offering real-time data processing alongside telematics services.
Online account management tools further streamline fuel expense tracking. They provide detailed reports on fuel spending and consumption, making invoicing easier and reducing the chances of fraud. By adopting these tools, your fleet can maintain efficient fuel usage while staying flexible in a changing market.
Tracking and Adjusting Fuel Budgets in Real Time
Once you've implemented strategies to cut costs, the next step is keeping a close eye on your fuel budget. Real-time monitoring is key here - it allows you to adapt quickly as fuel prices shift, often on a daily basis.
Real-Time Fuel Spend Monitoring
Tools like telematics, fuel cards, and GPS tracking make it possible to monitor fuel consumption as it happens. This kind of instant insight helps you spot issues such as excessive fuel use, unauthorised purchases, or even fraud before they spiral into bigger problems.
Fuel costs typically make up 28–38% of fleet expenses, with fuel theft alone accounting for up to 6%. Real-time monitoring flags unusual patterns right away, allowing you to act fast.
For example, GRS Fleet Telematics provides detailed dashboards that give you a clear picture of fuel efficiency across your fleet. Integrated fleet management software can even sync odometer readings automatically, letting you calculate cost-per-mile data in real time.
Fuel cards add another layer of control. By setting spending limits and usage restrictions, you can monitor purchases by time, location, or amount. Transactions can also be tied to specific driver IDs, which not only helps with tracking but also encourages drivers to adopt more responsible spending habits .
Take Dan King Plumbing, Heating, and Air Conditioning as an example. By using AtoB's platform to track fuel consumption and driver behaviour, they saved £1,050 in just two months. Their success came from leveraging discount networks and analytics tools.
These real-time insights provide the foundation for making smarter, data-driven changes, which we’ll explore next.
Using Reports to Make Data-Driven Changes
Real-time tracking is just the beginning. To truly optimise your fuel budget, you need to transform raw data into actionable insights. Customisable reporting dashboards make this easier by letting you focus on the metrics that matter most to your operations.
Fuel card and vehicle reports, for instance, can help you compare driver efficiency, detect maintenance issues, and fine-tune routes. These adjustments can lead to fuel savings of 10–15% . For example, comparing fuel usage among drivers on the same route might reveal inefficiencies and highlight opportunities for retraining.
Real-time data also allows for more dynamic scheduling and routing. Instead of sticking to static plans, you can adjust schedules based on actual vehicle locations and current conditions. This flexibility is especially valuable when fuel prices are volatile, helping you avoid unnecessary exposure to price spikes.
Regularly reviewing trends in fuel efficiency, comparing driver performance, and identifying opportunities for route optimisation are essential for keeping your budget flexible. Setting up alerts for poor driving habits - like idling too long, harsh braking, or speeding - enables immediate coaching and helps keep costs under control.
Conclusion: Effective Fuel Budgeting for Fleet Success
Managing fuel budgets with flexibility helps fleets navigate price fluctuations and maintain smooth operations. The numbers speak for themselves: in 2024, businesses using fleet management tools cut fuel expenses by 24%, making a noticeable difference to their financial performance.
At the heart of effective fuel budgeting are three essential components: strategic planning, technology integration, and continuous monitoring. These elements build on practices like route optimisation, real-time tracking, and expense management. By leveraging historical data and preparing for different fuel price scenarios, businesses can create budgets that are both realistic and adaptable.
GRS Fleet Telematics offers real-time insights to simplify fuel management. For as little as £7.99 per month, its dashboards and tracking tools give you a clear view of fuel efficiency across your fleet, helping you make informed decisions.
Data shows that consistent monitoring pays off. Fleets adopting telematics solutions often achieve a 15% reduction in operating costs within the first year, with savings climbing to 20–25% by the second year. Even small changes, like reducing speeds by 5mph, can improve fuel economy by 14%.
Fuel management isn’t a one-and-done task - it’s an ongoing process. Regular reviews of fuel data allow for continuous adjustments and smarter strategies. The companies that see the most success are those that treat fuel budgeting as a dynamic effort, constantly refining their approach.
Staying proactive is key. By combining forecasting, advanced technology, and regular analysis, you can transform fuel costs from an unpredictable challenge into a manageable expense. With the right tools and strategies, your fleet can not only keep up with fuel price changes but also thrive despite them.
FAQs
How can telematics help fleet managers cut fuel costs and improve efficiency?
Telematics offers fleet managers a practical way to cut fuel costs and improve efficiency by providing real-time insights into driving habits. Behaviours like idling, harsh braking, and speeding can be identified and addressed to help reduce fuel consumption.
These systems also support route optimisation, guiding drivers to avoid traffic and choose more fuel-efficient routes. On top of that, automated maintenance alerts ensure vehicles remain in top condition, tackling problems like underinflated tyres or engine inefficiencies before they lead to wasted fuel. Combined, these features can result in notable savings and smoother operations for fleets across the UK.
What causes fuel price fluctuations in the UK, and how can fleet managers plan for them?
Fuel prices in the UK often shift due to a mix of influences. These include geopolitical events like conflicts or trade disputes, fluctuations in global oil prices, and changes in currency exchange rates. On top of that, local factors such as supply chain hiccups and adjustments to taxes can also have an impact.
Fleet managers looking to navigate these changes effectively should keep a close eye on developments in the oil market and stay informed about UK-specific economic trends. Adopting flexible budgeting strategies can also make a difference. Additionally, using tools like van tracking systems can help streamline routes and cut down on fuel usage, adding an extra layer of cost efficiency.
How can fleet managers create a flexible fuel budget to handle price fluctuations?
To handle the ups and downs of fuel prices, fleet managers can use a range of strategies to create a more adaptable budget. One approach is to look into fixed or capped fuel pricing agreements with suppliers. These agreements can help keep costs steady, even when market prices fluctuate.
Keeping a close eye on fuel consumption is another key step. By optimising routes, promoting fuel-efficient driving habits, and cutting down on unnecessary idling, you can significantly reduce fuel costs.
It’s also important to stay updated on market trends and the factors that drive fuel price changes, like geopolitical events or seasonal demand shifts. This knowledge allows you to anticipate price movements and adjust your budget accordingly.
Using flexible procurement methods and adopting technology, such as van tracking solutions, can further streamline operations and improve cost control. For instance, tools like GRS Fleet Telematics offer insights into vehicle usage, making it easier to make smarter budgeting choices.
