I can tell you that most of our clients and other companies we've had conversations with have seen an upturn in demand.  More miles, more fleet fuel and a great demand. 

Let's take a look at what has been going on with fuel.  At the writing of this article crude was over $85 a barrel. Diesel fuel prices were at their highest levels since November 2008. OPEC is still playing around about any further increases in production.  They will increase fuel production but it will come a few months too late.  OPEC's view is better to be late and make more money than early and not cash in.  Remember for most of these countries oil is their economy. 

The EIA is still holding to their $81 a barrel prediction for crude the rest of this year.  I don't know if you recall but their track record in recent years for pricing has not been very good.  I have more confidence in companies like Morgan Stanley who seem to be more in tune than the government.  The government still plays 8 track tapes compared to Morgan's with the latest IPod.  Oh, I forgot to mention that the outward months for trading of crude oil are in the high $80's so that market believes it's going to be higher.

At least three weather services have forecasted a bad year for hurricanes.  With the weather we have had over the last five months in the Northeast and other parts of the country, nothing really surprises me on that end.  What I do know is our country's fuel infrastructure is not what it used to be.  I heard an economist talk a few weeks ago and he explained away why we don't need the refineries we once had because of technology.  What he failed to explain to the crowd was if you have 300 refineries and one goes down with issues or turnaround which happens twice a year it's not that big of deal.  When you have the same number of gallons being produced now by less than 150 refineries, when one goes down, it puts a real strain on the system.

Now, let's look at some of the other things being thrown at diesel fuel prices. How about state mandates for bio fuel?  Easy if you have the bio fuel right in your backyard, not so easy if you have to put it in a railcar and ship it to be blended.  Let's not forget that for the past four months there has been no blenders credit of a dollar per gallon for bio fuels, so that has caused the industry to stall.  That industry is just at its beginning and starts and stops don't help the overall production of the product.  No $1.00 tax credit, some of which gets passed down to the end user of Bio which certainly would make the Bio blends more attractively priced.  Without that credit, with more local Bio mandates in place and coming fuel prices will increase.

I am not here to predict gloom and doom about diesel fuel prices but I do believe we will have a crude awakening during the rest of this year and next.  Higher crude oil prices mean higher diesel fuel prices and certainly higher gas prices, so none of that is good for any of us but the facts are the facts.  I don't know if you have to run out and buy fuel insurance/hedges because the outward months are high.

If you're not a client here is my elevator of facts to you why you should be a client:

• Oil is trading at a 18 month high just under $85 a barrel
• Refinery utilization is at 80% compared to 2008 when it was at 90% and diesel fuel was $4.76
• 7% of all fuel invoices have mistakes
• March 2009 to March 2010 diesel fuel prices increased 96 cents
• Experts are predicting 18 named storms during hurricane season this year
• OPEC just met and showed no signs of increasing production
• Oil is traded on the NYMEX in U.S. Dollar, the dollar is not in a strong position and looks to get weaker as we borrow more money to fund health care and other projects, this means it is cheaper for other countries to buy oil
• 2% of your diesel fuel budget is lost to theft, 4% of your gas budget is lost to theft, most of it is internal (your people stealing from you)
• Speculators like to trade hard when the U.S. Dollar is weak as a natural hedge against inflation, this happened in 2008, when oil prices went to $147 a barrel
• China's reported April 1 that their economy is growing it's fastest since 2004. They will need more oil to handle that demand
• DEF and Bio Fuel will change your fuel buying, do you have time to keep up
• Over the last year according to the DOE, 2 refineries have shut down and several smaller plants have been idled, it would take a period of time to bring them back up
• Morgan Stanley projects close to $100 a barrel by the end of the year
• U.S. economy is recovering which will increase demand for diesel fuel

Sorry I talked fast but I knew I was only going up one floor.  If the elevator ride was going up more floors for me, I would have more time to explain why fuel and the elevator were going up and you needed us more than ever.

Enjoy your day.  Watch your step, time to go create some more money saving fuel strategies for our clients, before it's too late.