The World Famous "Fence Wizard": Fleet Decisions: Gas vs. Diesel.

Friday, December 28, 2007

Fleet Decisions: Gas vs. Diesel.

Often times we fall into the trap of thinking that overhead costs are generally the same for everyone and there is not all that much we can do about it. An average company can get away with that mentality; a great company scraps and claws for every possible cost advantage over their competitors. In a slow Fence Market - cutting costs and buying smart has never been more important for your bottom line. If you are in position to add or replace a truck in your fleet - we hope this diesel vs. gas comparison will help.

Numerous considerations must go into your decision. You have to worry about insulting the local Chevy dealer if you buy a Ford; will Jim (your best foreman) get mad that his truck is now the second newest because Franks 76' International is the truck your replacing and not his. Will your wife complain that you are spending 50K on a new "work" truck while she is still driving the Volvo that she has managed to dent on all four corners, top, and bottom. We can't calculate those items mathematically; we can estimate the cost per mile of a new truck. Your cost per mile vs. your evil competitor is all that matters here.
We all know that Diesel has outpaced the price of gas per gallon for some time now. Lets briefly review the past three years:
As you can see Diesel is projected to stay higher in 2008 but the cost gap is narrowing. The Fence Wizard Calculator says that Gas was running 5.5% cheaper than diesel in 2005 but that number is expected to narrow to 3.1% in 2008. Those who already own diesel trucks know that paying a small premium for fuel is well worth it - lets briefly review why that is the case:
Diesel trucks get much better mileage when comparing gas trucks with equivalent power (if you can find one). Overall Diesel maintenance costs are cheaper despite higher costs for oil changes; lets skip to the chase - Fleet Central has performed an exhaustive fleet review cost comparison for "Medium Duty" trucks. We will not bother re-inventing the wheel so here it is:
If you are not familiar with the depreciation line item ask your accountant if and how he or she is depreciating your rolling stock and read this depreciation guide.
Ready to go Diesel?
Popular Mechanics just completed a three-way comparison of light duty diesel pickups in their December 2007 issue (Fence Wizard readers may access the article and the video free of charge). They gave the trophy to the Chevy Duramax (fastest 1/4 mile and the best fuel economy of the bunch).The fact is that running 20 year old trucks will keep your cost per mile high - you have to ask yourself how much does one transmission failure 40 miles from town actually cost you? If your ready to upgrade - the Wizard recommends that you think Diesel.

Energy Information Agency
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2 comments:

Jim Fisher said...

The Medium Duty Truck comparison is slightly misleading if we are on the topic of light duty trucks. Im not sure if a new diesel light duty can get double the mileage of the light duty gas. But they also used a larger cost differential between gas and diesel then the expected 2008 costs as per your first chart. In conclusion, I cant argue with the basic facts that a diesel truck will run less per mile in the long run.

Thanks for the great website and tools

Anchor Fence said...

Our vinyl fence company in Michgian currently runs one diesel engine truck (F450) and multiple Gas engine trucks (F350) for our fence installation crews.

I must say that Im not sure if we have analized the gas milage of them for comparison but this may be an option now that I have reviewed this post.

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