On September 20th I reported that the Houston MDO price, according to BunkerWorld, was $691.50 which was a $40/ton increase over July 19th. Today Houston MDO is $740.00/ton. That’s nearly a $50/ton increase over September 20th. That comes out to approximately $0.30/gallon increase in fuel costs from July 19th to today, which is starting to be noticeable.
For one client that I’ve worked with, that increases the cost for their regularly scheduled trips (approx 600 miles) by over $3,200. They make this trip twice per week, 52 weeks per year. So extending this, if fuel prices remain at their current levels his cost of operation for the year could easily increase by over $330,000!
Fuel prices will not stay at these levels but the jury is out on whether they will increase or decrease. Once we get past the November elections and with the deep water drilling moratorium lifted, there should be more certainty. One certainty is that it will cost more to get a barrel of oil out of the Gulf of Mexico. If the economy starts to rebound and transportation demands start to increase there will likely be additional pressure on supply and demand economics that could further drive the price of fuel upwards.
An operator, similar to the one mentioned above, that is consuming in the area of 1 million gallons of fuel per year – per vessel can expect to pay between $2.1 and $2.5 million for fuel. With even a modest savings of 2% the savings would range from $42,000 to $50,000 per vessel. Most MFM scenarios can identify from 2% to 5% in savings potential, or more. But, as I’ve stated before, savings in this range are nearly impossible to identify and monitor without an MFM solution in place.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
