Midas Management Consulting

How to Combat the Impact Rising Fuel Costs Have on Your Business

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Courtesy of Midas Management Consulting

With fuel prices soaring, business leaders must once again find ways to offset the negative impact fuel surcharge clauses in standard service agreements have on profit margins. Many standard service contracts allow the provider to pass through rising fuel costs to their customers. To counter the surcharges, managers must scrutinize all their agreements, identify the services where fuel surcharges will pinch profits and take steps to drive inefficiencies out of the programs.

The impact on business comes from fuel costs being passed through to them in many standard service contracts, such as waste and recycling, freight, uniform, and food, just to name a few. Managers must scrutinize their agreements to identify the services where fuel surcharges pinch profits. The fuel additive, MTBE (methyl tertiary butyl ether) is the latest culprit. Failing to secure governmental liability protection concerning groundwater pollution, petroleum refiners are quitting MTBE cold turkey in May. With no tapering period, the replacement, ethanol-blended gasoline will take six months to ramp up to fill the gap in production.

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