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Beyond the Oil: What Affects Fuel Price

Operators are really paying attention to the cost of a gallon of fuel—even more so than ever before—and noticing the discrepancy in price across the globe. Fuel in Region A may be considerably more expensive than fuel in Region B, but the reasoning for the price hike is often unclear. If the price of crude oil per barrel is relatively consistent throughout the globe, why the discrepancy in a gallon of fuel? It’s because there are a number of factors that go into the price of a gallon (or liter) of fuel, beyond the price of crude oil. Often, this comes down to location, location, location. 

For starters, fuel deliveries for FBOs in remote areas cost more. The mode of transportation is less efficient and it takes more time and resources to deliver the fuel that’s needed. For instance, fuel deliveries via truck are less efficient than fuel deliveries via pipeline. In addition, fuel supply may be less accessible, causing the price of fuel to rise. These cost differentiators inevitably end up in the price of fuel at such locations. 

Other variables include airport leaseholds, which vary greatly depending on the geographic market, as do the number and type of equipment needed to run the FBO safely and efficiently. Hours of operation, costs of insurance and services offered all vary by location, which often affects the price of fuel. 

Finally, price can also fluctuate due to the taxes and fees mandated by the FBO’s state or region. Lower taxes often mean a lower price on fuel and vice versa. 

There are numerous considerations that go into the price of fuel. The system is rather complex. So while the base price that’s updated weekly comes from the barrel of oil, the price of fuel is really so much more than that.

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