How do you solve a real life "maths" petrol dilemma – Help needed?
November 28th, 2009 | by admin |I have a real life maths problem scenario but I need a maths expert to help me as I cannot get my head around the conceptual maths part of it.
I get reimbursed business miles I do every month – the monthly total business miles figure is generated via a GPS tracking system that records daily business miles and reimburses monthly at a PENCE PER MILE (PPM) rate of about 14 pence. The PPM rate changes monthly, slightly up or down depending on the constant changing fuel price in the UK.
This figure is calculated by the Business as follows:-
(Total Fuel Purchase / Total Gallons) / MPG (i.e. expected to get 35mpg) = PPM
Example;-
Total Fuel Purchase = £563.76 Total Gallons = 115 thus MPG = 35mpg
563.76 / 115 = 4.90
4.90 / 35 = 0.14ppm
(I do not suspect that knowing how this is derived is relevant to the question I will pose shortly apart from the fact that we are expected to achieve 35 miles per gallon on the vehicle and if we under achieve on this target we pay for it ourselves somehow and if we over achieve they give a credit for this somehow).
For NON business miles that is tracked via the GPS tracking I am NOT reimbursed this PPM rate so if I use the vehicle privately, I similarly pay a 14 PPM rate out of my pocket although no “credit” at 14 PPM is given for non business miles.
Therefore, I get a “credit” for all business miles only monthly at this 14 pence (PPM) rate but the business also give me a BP Fuel Card (relevant to this query as BP is by far, not the cheapest fuel to purchase in the UK) which they charge against the “credit” they have given me for business miles (i.e. Credit given for business miles and then the BP Fuel Card Monthly Bill charged against this credit)
So in an example they may give me £300 credit for business miles but my total fuel card bill may be £350, therefore I am in DEFICIT or I could be in SURPLUS if my total fuel card bill came to £280.
My main and important query is – Does it make a difference if I actively seek to buy the cheapest fuel? Does this benefit me or the business? If so, can you please explain how this benefits me i.e. does it make any difference to me financially to seek the cheapest fuel which I have been doing as a general principle in the expectation that I AM PERSONALLY BENEFITING financially by doing so.
This has lead to heated debates between colleagues and friends where some have argued it is in my financial benefit to seek cheap fuel whereas others have said it makes no difference at all and that I should fill up anywhere?
My secondary query which is not as important as the first – The business works STRICTLY on a monthly basis for fuel calculations but obviously no one can be exactly sure of how much fuel is in the car at a month’s end?
Some argue that I should aim to run the tank down at month end not to end up in a bad “deficit” position, and, or, not to fuel up at all on the last day of the month as this will ‘create’ a deficit. Is there logic in this as any deficit at a month’s end would be a credit in the new month following, wouldn’t it so you maybe worse off at one month but be in a recovered position the next?
Please help as this has been bewildering me for quite some time, especially whether it is in my own financial interest to continue finding the cheapest fuel or whether I have been and will be wasting time by doing so.
Having administered a very similar scheme I can assure you that filling the tank at the month end makes no difference over a period of time,swings and roundabouts, you gain one month and lose the next.
As regards the cost per gallon usually the card issuer advises the average cost of fuel both per vehicle and across all vehicles in the fleet so, normally to keep things simple the average across the fleet is used to avoid dozens or hundreds of individual calculations. By you shopping round the difference made will be insignificant.
A better approach is to try and improve your personal MPG figure this will give you a "profit of 14p for each extra mile covered per gallon which if you cover many miles could be significant.
2 Responses to “How do you solve a real life "maths" petrol dilemma – Help needed?”
By bob b on Nov 28, 2009 | Reply
something similar happened to me last year when the fuel prices were really hotting up. The company accountant sent out an email asking wherever possible could company car users fill up at a supermarket as they tend to be a penny or two cheaper and would bring a good saving to the comapny.
The two main oppositions to this were that:
1, you have to go out of your way to find a supermarket ( they dont usually build them on motorways ) so any cost saving was offset by the amount of fuel spent to and from these petrol stations.
2, ( from a colleague, so you’ll have to find out yourself how true this is )
the petrol supplied from "cheaper " outlets is somehow diluted slightly or has different additives and as such you dont get such good mileage from it.
Colleague seemed to think as much as 30 miles less on a tankful of cheap stuff.
He quoted some kind of study as his basis for saying this, so i am not in a position to disbelieve him.
Sentiment being that, it really doesn’t make any significant difference to you, so why not just fill up when you need to, wherever its convenient for you.
If you try to fill up on particular days as your work mates say, then sure, you will see a difference on a monthly basis. But compare yourself to someone who isn’t bothered about it over the period of 12 months, my bet is you’ll see no difference
References :
over decade in company vehicles
By streetblitzer on Nov 28, 2009 | Reply
Having administered a very similar scheme I can assure you that filling the tank at the month end makes no difference over a period of time,swings and roundabouts, you gain one month and lose the next.
As regards the cost per gallon usually the card issuer advises the average cost of fuel both per vehicle and across all vehicles in the fleet so, normally to keep things simple the average across the fleet is used to avoid dozens or hundreds of individual calculations. By you shopping round the difference made will be insignificant.
A better approach is to try and improve your personal MPG figure this will give you a "profit of 14p for each extra mile covered per gallon which if you cover many miles could be significant.
References :